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Hi John,
In exam 2014 Q1, I was told the current spot rate, and the annual inflation rate of us is three times higher than base country. How can I get the future spot and future price?
I tried to use lock-in rate and predict future spot using formula but can not get the answer and also I cant find the answer of this question.Thank you.
You cannot calculate the future spot rate or the futures price from the information in the question. You need to calculate the lock-in rate – the lock-in rate gives the net effect of converting at spot together with the gain or loss on the futures.
The lock-in rate is 1.0635 + ((1.0659 – 1.0647) x 1/3) = 1.0651.Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers. I don’t know about the Kaplan Kit, but certainly the BPP Kit contains both the question and answer for this question.
You can find lectures working through the whole of this question linked from the following page:
https://opentuition.com/acca/afm/afm-revision-lectures/
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