Perhaps a less relevant explanation would simply be:
While the current spot is $1.76 per 1 pound, i don't need 1 pound right now...i need 1 pound a year from now. In order to have that pound a year from now I only need to buy 1/1.062 pounds or .9416 pounds now, which at the current spot will cost me $1.6573 today.作者: LorrinCFA 时间: 2011-7-11 19:19 标题: Derivatives- Forwards
CFAI volume 6 derivatives pg 42 example 5, solution to A, I don't understand what that first step involves. Do we have the PV of $1.76 or $1.6573 and then turn that into pounds at what exchange rate? Why 1/1.062? I understand that we are going long the pound.
Thanks,
Andrew作者: bbtomato 时间: 2011-7-11 19:19
ps guys, sorry about the million typos in each post
i do not own a PC, i log in from a 1 inch phone screen.
