Can’t get my arms around this one So FCRP = [f-s]/s - (Rdc - Rfc) Rearrangingthis formula gets me to Unhedged: FCRP + Rdc = (F - S)/S + Rfc I don’t understand Hedged: Rfc + (F - S)/S Isn’t that the same thing as Unhedged? What am I missing?
I don’t even know the formulas, but hedged you enter into a forward contract, unhedged you don’t.