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For a bit more clarity, I'll replace $ZL_t$ with $X_t^{ZL}=X_t$ with the meaning: at time $t$, $1$ unit of currency $Z$ (asset, foreign, overZee) can be bought with $X_t$ units of currency $L$ (numeraire, domestic, Local). If $$ K < X_{t_0}(1+ i^L)(1+i^Z)^{-1}, $$ then, at time $t_0$, one can go long the forward contract that allows one to buy $1+i^{Z}$ ...


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