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in kenduri why are dividing the amount by the exercise price instead of directly dividing it with the contract size to get the number of contracts
The contract size is quoted in Pounds and therefore the $’s need converting to Pounds before calculating the number of contracts.
If you ask in this forum, the ‘someone’ is always me, because I am the tutor 🙂
There is a net payment in $’s. The exercise prices are quoted in $’s per Pound. They want the option to sell $’s at a fixed rate and so they need put options (the right to sell $’s at a fixed rate).
Have you watched my free lectures on currency options?
This Kenduri Co is a popular one))
Mr Moffat,
could you please explain to me – ho we select the necessary spot rate (buy or sell) for multilatteral netting when we need to recalculate all owed to/owed by into the basis group currency?
Two subsidiaries, one owes another in CAD, how do I pick the rate CAD to US$ whether it is buy or sell spot rate?
I can not grasp the logic there.
Thank you!
The question says that multi-lateral netting is to be converted at the spot mid-rate i.e half way between the buy and sell rates.
Ah, spot mid rates means the average between the two..Ok, seems sometimes I really don’t understand what examiner means.
But thanks a lot Mr. Moffat!
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