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Dear, Mr Moffat
We have to chose the relevant fra from the pair. Instead of logically working out which fra is applicable from the pair
I have observed whatever fra rate that is shot against the foreign currency results in more value. Is the applicable one from multiple questions i solved
is that so? so i could apply this technique to figure out the applicable fra from the pair.
I am sorry but I have no idea what you mean.
FRA’s are for interest rate risk management.
If you are referring to foreign exchange forward rates then there is nothing to choose from – it is whatever the forward rate is that applies to the date of the transaction.
Yes foreign exchange forward rates not interest
But the pair is given. Even though one is applicable. Sometimes examiner gives the pair instead of the applicable.
I know there is a reason associated with chosing the relevant rate from the pair, but leaving that aside.
I have observed whatever fra rate that is shot against the foreign currency results in more value. Is the applicable one from the multiple questions i solved. Is that so?
I hope, u get where I am trying to get at now. It’s basically to figure out which rate is applicable from the pair, not anything else
I can only assume that you mean that the buy and sell rate are given just as they are with spot rates, and the rule as to which to use is exactly the same as for the spot rates.
My free lectures on foreign exchange risk management spend time explaining which rate to use, and why.
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