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Hi John,
It might seem like a silly question but can you please help me understand the use of these formulae and where are they relevant and applicable?S1= S0 * (1+hc)/(1+hb)
F0= S0 * (1+ic)/(1+ib)
I explain both of them in my free lectures, and sorry but you cannot expect me to type out all of my lectures here.
The first formula is used to forecast future spot rates, and the second formula is used to calculate forward rates.
Please do watch my free lectures on foreign exchange risk management (and if necessary the relevant F9 lectures, because both formulae are revision of Paper F9).
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