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Econ IRP vs. Derivatives IRP
Could someone confirm if my belief is true:
So it appears that the IRP formula in econ is designated as: F/S=(1+Rfc)/(1+Rdc)…but I believe we are given the F or S rate as an indirect quote - DC:FC.
In the Derivatives section on forwards the IRP formula is: F/S=(1+Rdc)/(1+Rfc)…but I believe we are given the F or S rate as a direct quote FC C.
Is this correct?
If we get an IRP problem in econ are we to assume (if not told which currency is DC) that the currency quoted as a:b, the “a” currency would be the domestic currency.
And if we get an IRP problem in derivatives are we just to assume that the quote is a direct quote since this seems to be the standard way to quote? |
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