In Tremblay Econ practice exam number 3 the first question asks for the forward/premium discount for 90 days from now. In my formula sheet I have annualized forward/premium as (forward-spot)/spot(360/90).
They used the mid point as the spot which I understand but then theymultiplied by ((actual/360)/(1+r us (n/360)) x (r cd - r us)…
can someone tell me how they arrived at this formula and why we put the days over 1 plus the interest rate times the difference in interest rates.