Interest rate hedges (June 2005)

The lock-in rate is not estimating the spot rate. It is calculating the net effect of using the actual rate at the date of the transaction and the gain or loss on the futures. I do explain this in detail in my free lectures. What you have done is OK, but depending on what is asked in a question it is important to be able to explain how futures actually work.

Yes, you can do as you wrote in your earlier post. However, as I wrote, just in case you are asked to write about it then make sure that you are clear as to what strictly happens.

You are welcome (and thank you for your comment :-) )