Sir can you please explain the working of Future contract in this question. The 4 month strike price is not given.
And in the solution examiner is taking 3 month future price to calculate the basis.
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JUNE 2014 Q1 - CMC
10y ago#1The correct way of doing it is what the examiner has written in italics as an alternative.
There is has calculated the lock-in rate.
I suggest that you watch the free lecture on lock-in rates.
Also, if you go to the main P4 page and follow the link to "P4 Revision and Past Questions" then you will find that I have uploaded a lecture working through (and explaining) the whole of the question CMC.
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