My first question is related to FRAS
Sir i solved the way as
If int rate increases by 0.9%
Actual return on deposit
( 48m×4.79%×4/12) $766400
Payment to voblaka bank
(4.82%_4.79%×48m ×4÷12) 4800
Net return 771200
But when i am looking answer at the back while calculating payment to voblaka bank they used( 4.99%_4.82%×48m×4/12)... i think they should have used 4.79% instead of 4.99%) please explain and correct me
2 i have doubt in part b theory which says how delta value of an option could be used in determining the No of contracts purchased i cannot understand this part please guide
Ask the Tutor ACCA AFM
Awan co december 2013
6y ago#11. FRA's do not have to be made with the bank with whom the investment is made - it can be with another institution and the payments are made by reference to the inter-bank rate.
2. I explain delta hedges in detail in my free lectures on options.
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