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Hi John,
When do we use the basis method of calculating the futures price and when do we use the method as per casasophia june 2011 i.e using the two futures price given to determine the futures price we need?
If you know a spot rate at the date of the transaction, then always you should use the change in the basis to calculate the futures price at that date.
If you don’t know the spot rate at the date of the transaction, then you should calculate the lock-in rate (which is again using the change in the basis).
In Cassopedia, the way the examiner did it really is not correct (but he did state that calculating the lock-in rate was OK 🙂 )
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