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Interest FRAs

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Interest FRAs

  • This topic has 1 reply, 2 voices, and was last updated 3 months ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 6, 2022 at 10:23 pm #650015
    rehan1o1
    • Topics: 4
    • Replies: 6
    • ☆

    Hi Mr. Moffat,

    I hope you’re doing well.

    I took classes from a well known teacher. The way he has taught us to calculate net return in FRAs is abit different from what I see in examiner’s answer which results in a different answer. Could you please tell me if this is the right approach or my marks will be deducted if I follow this.

    Question reference. Awan co. (Dec 13)

    Int inc by 0.9
    Actual return $766400 (same as examiner)
    Gain due to FRA $4800 [=(((4.82-4.79)/100)/12)*4*48000000] different from examiner
    Net Return $771200

    The way he has calculated gain due to FRA is FRA rate (4.82) less LIBOR (4.09) less 20 basis points (mentioned in question) + 0.9

    Thank you

    March 7, 2022 at 7:53 am #650026
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49603
    • ☆☆☆☆☆

    You would still get the marks doing it this way 🙂

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