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?!
Ask the Tutor ACCA AFM
June 2016, Q1(b)(ii)
8y ago#1You 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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