Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › CMC Co (Jun 14)
- This topic has 3 replies, 2 voices, and was last updated 1 week ago by John Moffat.
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- November 29, 2024 at 8:26 am #713593
Hi Sir John Moffat,
Sir, I can correctly calculate basis as -0.0008 after 4 months using this I can also calculate the futures lock in rate as 1.0651. And when I do a back calculation I’m able to get the spot rate as 1.0643 (1.0651+(-0.0008)). When I use this for futures calculation I get CHF 4,750,728 which approx matches with the answer key.
But when I use this to calculate the options @ 1.06 my answer doesn’t match with the answer key. I’m performing the following calculation:
Premium: 96,474
Since the option will not be exercised, I convert the transaction at my spot rate: 5,060,000/1.0643 = 4,754,299. This gives a total cost of 4,850,773. But if I add the loss of option (19,191) (which shouldn’t be added since I’m not exercising the option) my answer approximately matches.Sir, can you please help me what’s wrong here?
November 29, 2024 at 9:06 am #713594You can find lectures working through the whole of this question linked from this page: https://opentuition.com/acca/afm/afm-revision-lectures/
They should explain your query 🙂
November 29, 2024 at 9:20 am #713595Thanks so much Sir, this was very helpful. 🙂
November 30, 2024 at 8:45 am #713619You are welcome 🙂
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