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Hello John,
I wanted to ask you why we use the futures price at the beginning of the contract ( the exch rate given in the question ) to calculate the contract required when futures reciepts/payments can be found through closing the contract at a loss or gain but we use the lock in rate to find the number of contracts when we find the reciepts/payments using the lock in rate?
I always thought that since the current futures rate is the only information available at inception of contract, that’s what would be used to calc how many contracts to buy.Thank you.
There are arguments for using either the current futures price or the lock-in rate (we are able to estimate the lock in rate from the start), so the examiner allows you to use either of them 🙂
Oof okay, that’s a relief. Thank you so much for your quick insight on this and the hundred other questions you’ve answered over the years. You’re a lifesaver!
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