Because it is trying to compute the present value of the contract. It is the equivalent notation as putting the discount rate in the denominator. The CFA changed the notation apparently, but, the main point, is that if it is to the power of negative, it is computing the Present Value.
In example of futures contract with initial and maintenance margin- after mtm loss of USD 768, will 768 USD need to be deposited or just 8500-8106=394 USD
Hi, could anyone please explain why in example 2 (7:20), the formula uses to the power of NEGATIVE 91/365 ? why is it not positive ? thank you!!
Because it is trying to compute the present value of the contract. It is the equivalent notation as putting the discount rate in the denominator. The CFA changed the notation apparently, but, the main point, is that if it is to the power of negative, it is computing the Present Value.
In example of futures contract with initial and maintenance margin- after mtm loss of USD 768, will 768 USD need to be deposited or just 8500-8106=394 USD
It will be 768
Why don't you use pen or mouse pointer to explain... Your explanation will be much better if you do it..
zhina