- This topic has 6 replies, 2 voices, and was last updated 11 months ago by
.
- Posts
Hi Sir,
Why is my answer different from the AFM Answer sheet?Today 31-Aug 30-Sep
Spot 0.2358 0.2374
Fut.Price 0.2378 0.2379
Basis -0.002 -0.0005 0Lock in (0.2378+-0.0005) = 0.2373
But in the AFM answer sheet, they have given 0.2374.
Because of this 0.0001 difference, my entire workings do not match with the answer sheet.
Could you please explain to me, sir?
Thank YouYou will not be penalised for such a tiny difference (which is due to roundings). The marks are for the workings and not for the final answer (which will obviously be a bit different) 🙂
But sir, as per my answer I am getting 193 contracts but the given answer is 192.92 contracts.
They have specifically mentioned underhedged or overhedged and how it should be treated when doing the hedging workings.
Due to my difference, my final answer is also not tallying
Are you sure that I will not get penalised?
and why is my answer different in the first place…I dont get it
But sir, as per my answer I am getting 193 contracts but the given answer is 192.92 contracts.
They have specifically mentioned underhedged or over hedged and how it should be treated when doing the hedging workings.
Due to my difference, my final answer is also not tallying
Are you sure that I will not get penalized?
and why is my answer different in the first place…I don’t get it.
I hope the way I have calculated is correct thoughWhich answer are you looking at?
The question specifically says that the number of contracts should be rounded to the nearest contract (as we would do anyway) and the examiners suggested answer works on 193 contracts.
The following is the answer provided in the answer sheet published by ACCA
Futures (500,000 x 193) +Payment on forward market = Future Receipt
96,500,000 + (38,397) = 96,461,603But since I am getting an exact figure of 193 contracts the answer that I am getting is 96,500,000.
This is what I am worried about sir?
Now I understand your problem.
Your lock-in rate of 0.2373 is OK. The difference is just due to rounding and you would not lose any marks here.
Given that there are 193 contracts (which you agree with), this would result in an underhedge of
(193 x 500,000 x 0.2373) – 22,900,000 = $550 on which you would use the forward rate.This tiny rounding does obviously make the final result different, but you would not lose any marks for this 🙂
- You must be logged in to reply to this topic.