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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Dec 23 Mock Exam – Orion Co
Greetings John
IN the mock exam there is a question for the exchange rate risk where futures and options are asked and they have not given the spot rate at that date nor the future rate as of May 31. In the answer I found the some calculations but I fail to understand them.
Please explain more on how to determine the spot rate if both the future and spot at the contract closing date is not given.
When using futures we calculate the ‘lock-in’ rate and apply that, which calculates the net effect of converting the transaction at spot together with the gain or loss on the futures.
I do show in my free lectures how to calculate the lock-in rate (and why it ‘works’ 🙂 ).