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hello sir,
i used the lock in rate to calculate the amount payable in chf.
however when i calculate the no of contracts to be sold, it is a decimal. in this question, the round off is negligible to a mere 0.02 contract.
in case, the difference was more than that, would i have to calculate the amount payable for the unhedged amount using the forwards rate separately or does the lock in rate cover it?
You would recommend using the forward rate on the amount over or under hedged.
(Incidentally you can fine a lecture working through the whole of this question if you follow the link to ‘revision kit live’ from the main Paper AFM page 🙂 )
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