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Dear John,
Plaese make the following clear for me:
During the examination when in a qestion on currency futures we need to make payment on the transaction date, shall we use the profit on futures contract to make part of the payment and convert only the remainder? Or we just need to write a comment on that.
Thaks in advance!
I would only write a comment. It doesn’t actually make much difference to the final net amount (because it would the only effect would be that sometimes the profit would effectively be converted at the other exchange rate).
Do make sure you also watch the lecture on lock-in rates, because these days it is becoming more common in the exam for not to be given the exchange rate on the date of the transaction, which means ‘predicting’ the net affect (which is the lock-in rate).
Thank you!
I asked this as in the Kaplan study text it is presented like a “rule”
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