Talk:Forward exchange rate

Annualize
In response to this edit, which I reverted with a WP:SOFIXIT suggestion, the example is taken straight from a textbook. It uses 360 days because of banks' tendency to use a 360 day year in calculating daily compound interest. The case here is that the d will have whatever value depending on the days to delivery. The example already does that toward the bottom of the Forward premium or discount section. So, actually, I'm not sure what needs fixing? At any rate, please avoid writing text onto the article that says "the following should be modified" and the like; such comment text belongs on the talk page so that we avoid leaving editor notes embedded within the article content. John Shandy`  &bull; talk 13:45, 27 March 2012 (UTC)

Forward rate formula is confusing
Currently it says:

id is the interest rate in domestic currency (base currency) if is the interest rate in foreign currency (quoted currency)

However whether it is domestic or foreign depends on whether it is a direct or indirect quote. There relation between base-domestic and foreign-quoted is not 100% true and will create confusion for readers. — Preceding unsigned comment added by Jakesee (talk • contribs) 15:56, 10 July 2015 (UTC)


 * Yea, I can see how that might be a little confusing. Perhaps we can clarify that the formula is written with the presumption of direct quoted exchange rates, or else we can do away with the parentheses altogether? They may not really be necessary.  John Shandy`   &bull; talk 20:04, 10 July 2015 (UTC)

Peer review
Should we subject this article to peer review? Lbertolotti (talk) 15:13, 12 August 2015 (UTC)

Dr. Vitale's comment on this article
Dr. Vitale has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"I would argue that most of the empirical evidence on the forward rate unbiasedness hypothesis is that it does not hold true. The references in this entry that support it are not very convincing (who really cares that it held in the 1920s? while cointegration analysis at best indicates that it holds over the long run). I would also add among the cited literature Froot and Frankel (QJE, 1989), as they provide an important decomposition of the forward bias.

Finally, two more suggestions. Firstly, consider that in the notation P indicates both the forward premium and the risk premium. To avoid confusion you should use different symbols. Secondly, to have a better comprehension of the forward premium, P_N, in daily terms an analogous presentation of a version of the CIP valid for monthly or quarterly periods would be useful."

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Vitale has expertise on the topic of this article, since he has published relevant scholarly research:


 * Reference : Francis Breedon & Dagfinn Rime & Paolo Vital, 2010. "A Transaction Data Study of the Forward Bias Puzzle," Working Paper 2010/26, Norges Bank.

ExpertIdeasBot (talk) 20:26, 24 September 2016 (UTC)