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ACCA P4 Revision lectures Download ACCA P4 exam
August 28, 2019 at 2:24 am
how did we get 1.0677 on the forward rate
John Moffat says
August 28, 2019 at 11:54 am
It is given in the question (note (i) under “over-the-counter products” at the end of the question).
August 23, 2019 at 4:49 pm
Dear John, thank you for your effort to help us past his exam. But past exams from 2013 are no longer available at ACCA pages. Could you possibly share ito us via opentuition websites? Or at least share names of the questions, they probably are part of Practise & Revision Kit. Many thanks. Mon
August 24, 2019 at 10:48 am
Thanks for that – I will arrange it 🙂
October 30, 2018 at 9:08 pm
hi john In your lecture on lock-in-rate , you said when we calculate lock.in rate, we will deduct expired basis from current spot and add unexpired basis to future price, so why in CMC june 2014 question we add expired basis. plz explain me, thnks
October 31, 2018 at 7:02 am
The current spot rate and current futures price will always move closer together, and therefore the lock-in rate will be between the two. You add or subtract depending on which gives a lock-in rate between the two.
You can find lectures working through the whole of this question linked from the following page: https://opentuition.com/acca/p4/acca-p4-revision/
December 6, 2017 at 4:37 pm
Hi for calculating the futures why didnt we have to work out the profit made between the selling and buying rate? or is this not relevant when you work out the lock in rate? thanks
December 7, 2017 at 6:55 am
The lock-in rate gives the net effect of converting at spot together with gain oarless on the futures. So yes – the calculation of the gain or loss on the futures is not relevant when using the lock-in rate.
August 23, 2017 at 7:31 pm
Hey, John great lecture. In this question, I have assumed that Switzerland’s inflation is 3% and multiplied it with 3 to get US inflation rate. After this, I calculated spot rate using purchasing power parity. Using that rate I found at the futures price in 4 months time by subtracting basis from calculated spot rate. The final futures answer gives me a difference of CHF 2084. So will I get marks for it?
August 24, 2017 at 6:22 am
Provided you stated all your assumptions, you would get some marks, but you would certainly not get full marks – what the examiners answer has done is correct.
August 24, 2017 at 2:17 pm
And also in my answer, I didn’t exercise the option as the spot rate that I had calculated was greater than the exercise price. Will i get marks for that too?
August 24, 2017 at 3:22 pm
I don’t know – I can’t see your answer 🙂 Probably not.
June 8, 2017 at 12:45 pm
when you calculate the lock-in rate, you used 1.0635+0.0016=1.0651, why shouldn’t I use 1.0635+0.0008=1.0643 or 1.0659-0.0016=1.0643. I’m confused when should I use the difference 0.0016 and 0.008. Can you please explain? Thanks.
June 8, 2017 at 2:05 pm
You either take the current spot rate and adjust by the expired basis: 1.0635 + (4/6 x 0.0024) = 1.0651 or, alternatively, you take the current futures price and adjust by the unexpired basis: 1.0659 – (2/6 x 0.0024) = 1.0651
(As to whether you add or subtract, it is whichever way makes the lock-in rate in between the current spot and the current futures price.)
September 3, 2018 at 7:59 am
OK now I am confused.
1.0659 – (2/3 x 0.0024) isn’t giving me 1.0651 1.0659 – 0.0016 = 1.0643???
Is something wrong with my calculators?
September 3, 2018 at 4:18 pm
I mistyped – it should be 2/6 (not 2/3) for the unexpired basis.
(Have you not watched my free lectures on the lock-in rate?)
June 6, 2016 at 12:44 pm
can we also say:
closing future price = current future price + basis at 4 months? (and we ignore the sign of the basis)
June 6, 2016 at 5:17 pm
Yes (the examiner shows both in his answer and either is fine).
He should not have called this the closing futures price – it is the lock-in rate.
The sign does matter in that the futures price and the spot rate will always get closer together – this determines whether you add or subtract.
June 6, 2016 at 8:22 pm
the sign has been bothering me …. up to now since closing spots were always given.. i did not have a problem….but now.. if i set up the table as
Spot —1.0635 future—1.0659 ———this will give me (0.0024)
but if i setup the table as
future — 1.0659 spot—— 1.0635 ………… this will give a positive sign
what is on to do??
June 7, 2016 at 8:10 am
It doesn’t matter – all you have to remember is that spot and future will get closer together. If current spot is higher than current future then it will stay higher. If current spot is lower than current future then it will stay lower.
May 20, 2016 at 3:04 am
Hi. When calculating the number of contracts, can we use the lock in rate of 1.0651 to convert the 5.06m to CHF? Or do we have to use the futures price of 1.0659?
May 20, 2016 at 3:30 am
I’m sorry for the question, i got what you did in the video. Thank you 🙂
May 20, 2016 at 7:06 am
You are welcome 🙂
March 10, 2016 at 5:59 am
Thank you for the lecture very well explained.
I got one question. Why did you add the basis of 0.0016 to the current spot and not deduct it??
What is the reason behind?
March 10, 2016 at 6:39 am
The spot and the futures price move closer together over time, whichever is currently the higher of the two will remain the higher of the two.
December 6, 2015 at 11:48 am
@Mr.Moffat re lockin rate – would it be acceptable to use banks forward rate for the future rate estimation and then calculate payment on the spot market plus loss on future market instead of using a lockin rate? thanks in advance
December 6, 2015 at 2:15 pm
No – they are two different things. It would not lose you all of the marks, but even so you should not do that unless there was no other information available.
October 14, 2015 at 9:10 pm
Dear Mr John, i want to access the full lecture video of the P4 pass papers. Is there any option to pay and get access to these material?
October 14, 2015 at 9:11 pm
Past papers 🙂
October 14, 2015 at 9:25 pm
All our resources are free of charge, and everything that we currently have is already available. More lectures going through past exam questions will be added when I have the time.
October 14, 2015 at 9:45 pm
Thank you sir for allocating your time and effort. I have a quick clarifation on how the future basis calculated. In the lecture slides this is calculated as (Future price – spot), but you have taken as spot-future price. is there any specific reason for this? Appreciated if you could help me on this.
October 15, 2015 at 8:40 am
It doesn’t matter which way round – the difference will be the same and it is the difference that matters. As the basis (the difference) reduces, if spot is higher than futures it will always be higher; if spot is lower than futures then it will always be lower.
June 1, 2015 at 1:03 pm
Thank you so much for all your help John and OT team. P4 is my last exam for ACCA. I hope I can pass this in first attempt. I have always used OT exclusively without any college tuition so far.
June 1, 2015 at 1:14 pm
Thank you for your comment, and the best of luck tomorrow from all of us 🙂
May 27, 2015 at 3:14 pm
May 27, 2015 at 4:46 pm
Thank you very much 🙂
May 25, 2015 at 7:38 am
why are we not calculating profit or loss on futures?….
May 25, 2015 at 8:12 am
Because we have calculated the lock-in rate as I explain in the lecture. (If you need more on lock-in rates then there is a separate lecture on them)
May 25, 2015 at 8:25 am
Can this then apply to any question….ie we just calculate the Lock in Rate or is it because we were not given the spot rate in 4 months time?
May 25, 2015 at 11:44 am
Yes – it not given the future spot rate, then best is to calculate the lock-in rate.
May 25, 2015 at 3:29 pm
Thank you for the clarrification
May 25, 2015 at 3:30 pm
May 25, 2015 at 4:35 pm
May 23, 2015 at 1:12 pm
really good lecture! thank u for explaining in detial
May 20, 2015 at 8:35 am
Hi Lecture when I calculate the contract size I get 3.7…. not 37…… what did I miss?
May 20, 2015 at 11:05 am
am getting 37.
May 20, 2015 at 11:09 am
actually 37.9 so 38
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