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john correct me if am wrong
we can calculate Forward Rates using interpolation of interest rates (if interest rate are given for today)
if expected interest rates of two countries for next three months are given then we an use interest rate parity Right?I don’t know what you mean by your first sentence!
Forward rates are always calculated using the interest rate parity formula.
(I think what you might mean by your first sentence is that if you are given a forward rate for (say) 3 months and for (say) 6 months, and you need a forward rate for 5 months, then you interpolate between the 3 month and the 6 month rates.)
No
differentiate me when to use interest rate parity for calculating Forward Rates and when to use Simple interpolation (like: (1+r)^3=(1+r)^2 + (1+R)) etcAnd yes that was another question as well to guide for interpolation for calculating a forward rate for 5 months
I am sorry but I have no idea what you mean by (1+r)^3 = (1+r)^2 + (1+r) (because it does not equal that and that is not interpolation either 🙂 )
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