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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Unexpired basis
I am confused as to whether to add or less the unexpired basis to arrive at the estimated closing futures price. Can you help me out please?
The spot rate and the futures price will get closer together as it gets nearer to the end of the future.
Therefore if the current spot rate is higher than the current futures price then you add the unexpired basis to the current futures price, whereas if the current spot rate is lower than the current futures price you subtract the unexpired basis from the current futures price.
Thanks John,
I get the trick.
You are welcome 🙂