FCRP always, through

malbec

I always mess up which inflation to subtract from which, is there an intuitive way to think through this?
Tks

Rasec

anybody please?

neil1234

not sure what you are even asking. The formulas I think of for FCRP don't have inflation.

economicz

I meant the interest rate differential my bad

thecfawannabe

i use Domestic - Foreign

(F - S)/S - (iD - iF)

profil

Instead of remembering that formula, you can calculate the price of the forward (you should know this formula). Then the FCRP is (E(S1) - F(0))/ S0 ) or intutively, the expected premium over a risk free return.

giorgio10

agree with manstey. mush easier.