Proposition- “the carry adjustment in a currency derivative contract is very similar to other carry models such as equity derivatives.” My doubt- how is it similar? Isn’t interest rate parity used for currency derivatives, and Cost of carry model used for equity derivatives?
SSEI QForum Latest Questions
New page 127- item set 5- In the formula for effective convexity, in the denominator “2” P⁰ has been taken. Is it a typo?
Example1- SRO also comes in the category of independent regulator, so which option to select when both “SRO” and “Independent regulator” are given?
Example 6- question 1. No- arbitrage condition means a parity which is not bound by arbitrage, is that right? So why is the answer not (c)? Explanation given for (b) is- “Covered int rate parity is enforced by equating the investment return on two ...
Can someone please explain Question2? Actually all options seem correct to me..I agree with the institute’s solution and reasoning of option b. But why not A and C ?
Doubt in question 1- Why has accrued interest at T (for 12 days) not been deducted in calculating the forward price of the bond?