Chp 23, Eg 4
Qt: Y is due to receive $150,000 in 3 months time.
Spot $/£ 1.5326 – 1.5385
3m forward 0.62 – 0.51 c pm
How much will Y receive?
Ans: Forward rate = 1.5385 – 0.0051 = 1.5334
150,000 ÷ 1.5334 = £97,822
I don't understand the 0.0051 figure, why is it not 0.51?
Ask the Tutor ACCA FM
Forward contracts
8y ago#1Because it is quoted in cents, and 0.51c is the same as 0.0051 $'s.
I do explain this in the free lectures on this chapter.
You should not be using the lecture notes if you are not watching the free lectures. It is in the lectures that I work through all the examples and explain and expand on the notes - they are only lecture notes.
If you are not watching the lectures for any reason then you should study from a Study Text from one of the ACCA approved publishers.
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