Hi John, I have a problem with the way the examiner calculated the predicted future price in question 2 June 2011. it is not only difficult to follow up what he is doing but he also used the figure calculated for the future price on the day the 20m will be converted to calculate the contract size rather than the price of the future on the day the futures were being bought. does it make sense
I do not like what has done regarding the predicted futures rate.
More sensible is the bit below in brackets about calculating the lock-in rate.
Also, it is debatable with price to use for calculating the number of contracts – I think it better to use the current futures price – but that would not lose any marks.