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June 2016, Q1(b)(ii)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › June 2016, Q1(b)(ii)

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
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  • May 29, 2018 at 3:47 pm #454645
    tasnuva
    Member
    • Topics: 24
    • Replies: 15
    • ☆

    In the mark scheme, it mentioned this when calculating the forward rate:
    ” since it is a receipt, the 1.1559 rate will be used”

    My question is, what rate would we have chosen if it was a payment? I always thought if the forward rate is given in this range, we always choose the first one. Am I right?!

    May 29, 2018 at 5:21 pm #454679
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54775
    • ☆☆☆☆☆

    You use exactly the same ‘rule’ as you use when conversion is at the current spot rate.

    I explain what rates to use in the first of my free lectures on foreign exchange risk management, and I do suggest that you watch them 🙂

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