iteracom

think of it this way

if you wanted to enter the contract today
look at formula 15 page 39

now modify it slightly, since we are not at time 0, we are at time t, it become

f(t,T)=(st/(1+rf)^(T-t))(1+r)^(T-t)

agree that is the fair price to enter at?

well wait, insted you are already commited at

F0

the diff is

(st/(1+rf)^(T-t))(1+r)^(T-t)- [f0]

but that diff does not happen till the future

so it all needs to be discounted back to today

devide both sides by (1+rd)^(T-t) in order to discount and you get the formula you have..



there are many other ways to go about it, all lead to the same thing, MATH has yet to disappoint me..

i hope this helps