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Hi John,
I was wondering, in Chapter 19 Ex 3 part (b), why not using the 1.4100 to calculate the premium?
The question is “Show what will happen if the spot rate in April is $/GBP 1.4100-1.4120”. So this effectively replaces the spot rate of 1.4850-1.4870 in part (a) (a different scenario isn’t it?)
However the answer keeps using 1.4850 as April spot rate. Not sure what’s the reason of this?Thanks!
WilsonThe premium is payable immediately (not on the date of the transaction) and is payable whether the option is exercised or not.
(It sounds as though you are using the lecture notes without watching the free lectures. It is the lectures that I explain and expand on the notes. If you are not watching the lectures for any reason then you must buy a Study Text from one of the ACCA approved publishers and study from there – the notes are not meant to be a Study Text.)
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