[fredah1kay]

Thank you understood.

[fredah1kay]

I see. Thank you very much Sir.

[fredah1kay]

How did you establish that CMC wanted Floating to begin with?

[fredah1kay]

Good day Sir, sorry i meant to say sell a call option. To calculate the extra cost of borrowing that will be reduced by the collar, since my interest rate is in range form, does that mean that the amount of extra borrowing that will be reduced will be in range form too?

[fredah1kay]

Using a question called Daikon co june 2015, using your guidelines in the video kindly advice if the below Collar is correct.

Buy a put option at 95.50=4.5%
Extra paid by Daikon 0.7%
5.2%
Premium 0.081% 0.304-0.223
Total 5.28%cap

sell a put option 96.00=4%
Extra 0.7%
Premium 0.081%
Total 4.78%

Hence collar is 4.78% to 5.28% is this correct.

Secondlyhow do i use this range to calculate the extra cost of borrowing that will be reduced by.

[fredah1kay]

Good day Sir just on this same topic.Using example 3 we converted the $ 1,000,000 at spot rate of 1.41 giving 709220 Pounds.

Then since we decided to excercise we deducted profit gained from 709220 and added the premium.

When i use the same logic on Kenduri 6/13 question am getting confused because they converted the payment of $ 2,400,000 at the excerise rate then added the premium. why didnt they calculate the gain or loss just as we did and why didnt they first convert the $ 2,400,000 at spot then adjust for premium and any gain or loss just as you did in example 3?

[fredah1kay]

and is there a scenario where we can use lock in rates instead of how i have calculated the futures price?

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