Comments

  1. avatar says

    This lecture was simply amazing for me, I was finding it hard to grasp the concept of futures. You explained it beautifully by comparing it to the Fwd exchange contracts and stock market… thank you, that was really very helpful :)

      • avatar says

        Most welcome :) … I just wanted to ask one thing, why didn’t I see anything about lock in rate? I am a bit confused about that… thankyou :)

      • Avatar of johnmoffat says

        I am going to record more about lock-in rates.

        For the moment, if you look at the examples in the revision notes for P4 (both currency futures and interest rate futures) you will find an explanation of lock-in rates.

      • avatar says

        Hi
        sir can u please clear this concept of lockin rates? i went through all the notes and got the formula but in the revision kit it seems like a different approach. i would be thankful if u clear this concept of LOCK IN RATES CALCULATION.

      • Avatar of johnmoffat says

        If the difference between the spot rate and the futures price (the basis) was to stay constant, then the net effect of converting at whatever spot happens to be together with the profit/loss on the futures would be as though the transaction was fixed at the current spot.

        However, the basis does not stay constant, but we can predict how it will change (by assuming that it falls linearly over the life of the future).

        So we can predict the net effect of converting at spot and profit/loss on futures. The net effect will be effectively as though we convert the transaction at the current spot rate +/- the change in the basis by the date of the transaction. (The spot and the futures price will get closer together, the + or – is whichever makes them closer together). This is the lock in rate.

        Alternatively (and this will give the same answer) the lock in rate is the current futures price +/- the basis at the date of the transaction.

      • avatar says

        :-) thankss alot for the explanation! got the concept really well….but this is the doubt which is still there:
        LAMMER PLC june 2006…. the basis is 0.486 and current future is 1.8986….. lock in is 1.8986+0.00486= 1.9035
        my question is that how did this 0.486 change to 0.00486

      • avatar says

        ooohhhhh thesee hidden secrets :-( i spent soo many hours thinking what it was!!!
        thanks again :-)! i will soon ask you some more questions on other topics that i have collected! hope to recieve such answers again :-)!

  2. avatar says

    I am unable to access the lecture videos! The error that i keep getting it this:
    Server not found: rtmpt://r.acca.opentuitioncom.netdna-cdn.com:80/play

    I am accessing the site behind a proxy, could this be the problem? Please help!

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