Reviewing 2009 Exam, Question 9, Part B: They solve it using both the SFFD and the other way using ‘PV(owned) - PV(owed)’. Anyone think the second way is worth learning? Seen any problems were you cant do SFFD?
SFFD is the safest and most direct way i think.
I used to do the other way, and it involved multiple steps and more chance for error.
it took me 3 minutes to figure out your “SFFD”
WTF is SFFD? Something to do with Swap, fixed, floating etc. I have not looked into 2009 exam.
I have spent more than 3 minutes and I am still not able to figure it out.
As you get closer to the exam, you are more in the mood for acronyms I guess.
spot/(1+foreign interest rate) - Forward/(1+domestic interest rate)
this was my best guess lol