• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Qs 4 pault .Sept/Dec 2016

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Qs 4 pault .Sept/Dec 2016

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 23, 2018 at 4:23 pm #453622
    adurich
    Member
    • Topics: 127
    • Replies: 120
    • ☆☆☆

    In the qs4 of pault Sept,/Dec 2016….how they are calculating forward rates ..is this interest rate cparity ..how is the formula used ..where does this -1 comes from ..in each year working of forward rates

    May 23, 2018 at 9:38 pm #453658
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54724
    • ☆☆☆☆☆

    No – it is not interest rate parity (it is based on a technical article on the ACCA website.

    Suppose you invested $100 for 2 years using the yield curve rate of 4.25%.
    It would grow to 100 x 1.0425^2

    Suppose instead you invested the $100 for 1 year at the one year rate (3.70%) and then for a further year at the 2 year forward rate of R.
    The $100 would grow to 100 x (1.037) x (1+R).

    So….100 x 1.037 x (1+R) must be equal to 100 x 1.0425^2

    Therefore 1.037 x (1+r) = 1.0425^2

    1+r = 1.0425^2/1.037
    R = (1.0425^2 / 1.037) – 1

    It is the same logic for the other rates.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Qs 4 pault .Sept/Dec 2016’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • ParthivP on FA Chapter 5 Questions IAS 37 – Provisions, Contingent Liabilities and Contingent Assets
  • Ken Garrett on Marketing – ACCA Accountant in Business (AB)
  • Relebohile10 on CIMA P2 Chapter 1 Test
  • AhmedRiflan on Business Documentation – ACCA Financial Accounting (FA) lectures
  • AhmedRiflan on Marketing – ACCA Accountant in Business (AB)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in