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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Currency Futures
Hi John,
If for whatever reason the examiner does not provide us with the spot rate at the transaction date what is the best rate to use as the spot.
A-The Lock in Rate(Current Spot rate less change in Basis)
B-The forward rate(if the forward rate information is given) Ive seen this done in another question but cant remember the name
C-The Futures price(the same futures price which was used at time NOW to determine the basis but then used as the spot rate at transaction date) Polytot 6/04 in BPP used this method
Thank you,
Best is to use the lock-in rate.
However this is not an estimate of the spot – it is estimating the effective rate that will result from using futures, whatever the spot happens to be.