Hey,
i really don’t get it. On p. 514-515 is an example of mark-to-market currency forward contracts. It is fully clear to me. However, the calculations of the following Example 3 (e.g. Question 5) are different. Especially, why do we calculate in the text example: (1.6340-1.6100) x 10 Mio = + AUD 240,000 and in the examples this doesn’t work. There, they calculate it like 10 Mio / 1.6310 - 10 Mio / 1.6100
Where is my problem?
This is because of the relevant currency you are converting.
In Q.5 you are converting 10mm USD to NZD, so when you use the USD/NZD currency pair, you divide 10mm USD by the USD/NZD exchange rate to get to NZD.
e.g.
10mm USD / (0.79 USD/NZD) = 10mm USD * 1 NZD / 0.79 USD = 10mm USD * 1 NZD / 0.79 USD = 12.658mm NZD
In the example on pg. 514, you are converting GBP to get to AUD, using the AUD/GBP rate, so you instead need to multiply through to for the conversion.
e.g.
(1.6340 – 1.6100) AUD/GBP × 10,000,000 GBP = (1.6340 – 1.6100) AUD/GBP × 10,000,000 GBP =
AUD 240,000
Ah, ok. So, there is no " general formula" that we can learn?
Actually, I believe you can use the general formula if you use the Price/Base currency notation. F(P/B) = (Spot(P/B)/1+r(F)) * (1+r(D))… you just have to remember that the domestic currency is the price and the foreign is the base and may need to flip these depending on what youre after.
Great. I’ll try it the next days, when it is Eco-Time again 
Ok, I had some time. Could anybody confirm the following (referring to the Q5):
We are short in USD 10 million with 0.79 USD/NZD --> is the same 1.2658 NZD/USD
So, to offset the contract we have to buy USD, meaning using the ask of NZD/USD or the inverse of the bid of USD/NZD (1/0.7813 = 1.2799)
Then, (1.2658-1.2799)NZD/USD x 10 Mio USD = - 141,000 NZD but that is not excatly the same amount which is presented in the solution. Why?
It’s just a rounding error, look at the significant digits used in the example vs. what you did above.
This sort of thing is all over the text and is incredibly annoying.
OK. Nevertheless, I have another idea…
I use the inverse for my calculation…but maybe it is not 100% the correct one since we have to rember that the bid in one notation is the inverse of the ask in the other notion et vice versa. However, here 0.79 is bid and ask at the same time?
Your calculations are completely fine, you just aren’t using the same rounding as the text, that’s the only difference.