June 2016, Q1(b)(ii)

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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May 29, 2018 at 3:47 pm #454645
tasnuva
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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
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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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