Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › CMC (JUNE 2014 QUESTION) Revision lecture
- This topic has 7 replies, 2 voices, and was last updated 4 years ago by John Moffat.
- AuthorPosts
- November 12, 2019 at 7:10 am #552279
Sir i want to ask that during solution of part (a) you did not calculate profit/loss on futures and directly calculate the future payment at rate of 1.0651.
can we calculate the payment by spot rate (found by lock in basis) at 1.0643(1.0651-0.0008) and then we calculate profit on future by 38x125000x(sell at 1.0659 – buy at 1.0651)=3800(receive).solution by me :
At spot rate (4M) 5060000/1.0643 =4754299
Profit on futures (38x125000x(1.0659-1.0651) = (3800)
=4750499(Answer)
sir guide me this above solution is right or wrong?
Thanks in AdvanceNovember 12, 2019 at 7:44 am #552284You can do what you have written and that is fine (the difference from the answer is simply due to rounding and it irrelevant).
However, why spend the time doing it? The lock-in rate of 1.0651 gives the net effect of converting at spot and the profit or loss on the futures.
November 12, 2019 at 9:13 am #552290Thanks alot sir for your guidance
You are my best teacher ever
sir can you give me any link or details for marking scheme in AFM.November 12, 2019 at 4:55 pm #552337If you download exam answers from the ACCA website, then on the final page you will find the marking scheme.
(And thank you for your comments 🙂 )
November 12, 2019 at 5:28 pm #552347In part 2 Swaps why CMC pays yield of counter party can you please explain to me
November 13, 2019 at 10:48 am #552402As I explain in my free lecture on swaps, the parties can settle up in any way they agree to – the final end result (which is all this question requires) remains the same. However it is common practice for one party to pay LIBOR to the other and for the other party to pay a fixed rate to settle up.
You can find lectures working through the whole of this question by following the link on this page:
https://opentuition.com/acca/afm/afm-revision-lectures/November 13, 2019 at 11:36 am #552410Ok sir thanks alot
November 13, 2019 at 2:18 pm #552428You are welcome 🙂
- AuthorPosts
- The topic ‘CMC (JUNE 2014 QUESTION) Revision lecture’ is closed to new replies.