The CFA book explanation says that value of currency forward contract is:
Vt(T)=Present value of the difference in forward prices=PV£,t,T[Ft(£/€,T)−F0(£/€,T)]
But in the example:
Q) [question removed by moderator]
The value of the foreign exchange forward contract at Time t will be closest to?
The value per euro to the seller of the foreign exchange futures contract at Time t is simply the present value of the difference between the initial forward price and the £/€ forward price at Time t or
Vt(T) = PV£,t,T[F0(£/€,T) – Ft(£/€,T)]
Why is it taking Initial - forward price at T ?? why not the other way?
Is this because of the short position? . If it would have been long than Forward -Initial.