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Polytot June 2004

This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.

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August 21, 2017 at 5:19 pm #402803
parisnaaa
Member
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Hi!
When calculating the forwards I did 1.5398+(1.5178-1.5398)/9*1 but didn’t give me the right answer. The examiner did 1.5398-(1.5398-1.5178)/9*1.But in lammer plc June 2006, the examiner did in my way. Please explain me the correct method.
August 21, 2017 at 5:32 pm #402806
parisnaaa
Member
- Topics: 32
- Replies: 92
Hi
In b how did they calculate £1.5m and £1.8m.?
August 22, 2017 at 9:11 am #402894
John Moffat
Keymaster
- Topics: 57
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The examiner uses the same approach in both Lammer and Polytot.
Think about it! Since the 3 and 6 month forward rates are lower than spot, then the 4 month forward rate must be lower also!!!
If they were both higher than spot, then so too would be the 4 month rate.
August 22, 2017 at 9:12 am #402895
John Moffat
Keymaster
- Topics: 57
- Replies: 54478
For b, the answer shows the workings!!!!
3M kg at 0.50 per kg = 1.5M
3M kg at 0.6 per kg = 1.8M
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