16. Equation (53–2) assumes that exchange rates are quoted in “direct terms,” i.e., the value of the home currency for one unit of the local currency, though quote conventions vary by market. Over-the-counter forward contracts use market convention, most of which for the U.S. dollar are in indirect terms (local currency units per one dollar). Using indirect terms, the forward discount or premium in Eq. (53–3) becomes f_H,i = c_i – c_H. To avoid the complexities of compounding, the time period is assumed to be one year.