Trying to understand how to value swap using FRA. In the notes we first calculate continuous fwd rate using the hull equation then convert to semi-annual fwd rate (continuous to discrete formula). Why do we do this?
Also, if anyone can explain to me in clear and simple words the different...
Can you please explain how do we calculate forward price with storage costs when given as $ values and as % ? Between the two books I am really confused..perhaps extend this with other Cost of carry factors.
Thanks in advance..
I am trying to relate the 2 concepts here and getting a little confused -
So-Fo = Basis where;
So<Fo = Weak Basis, Contango and model is Cash and Carry
at time = 0 if So<Fo ex. 4 and 4.2 i.e basis = -0.2 weak basis here
at time = t if St<Ft ex. 4.2 and 4.3 then basis = -0.1 weak...