- This topic has 3 replies, 2 voices, and was last updated 6 years ago by
.
Viewing 4 posts - 1 through 4 (of 4 total)
- Posts
Dear Mr. John,
For Part b (ii), did not understand why profit on futures is not calculated when the contract has been closed out and why futures price on 31st May is not calculated based on unexpired basis as of that date. Is it because information on spot price on 31st May is not provided or I am missing an important point to consider?
Because we do not know the spot or the futures price on the date of the transaction, we use the lock-in rate (which gives the net effect of converting the transaction at spot together with any gain or loss on the futures).
Most questions these days involve calculating the lock-in rate, and I explain what it is and how to calculate it in my free lectures on foreign exchange risk management.
Viewing 4 posts - 1 through 4 (of 4 total)
- The topic ‘BPP Practice Kit – Lirio Co’ is closed to new replies.