Home currency is GBP.
We received in USD.
Logically, we want to sell off our USD to get GBP.
But why did the answer in the book use the buy rate?
Given 3month and 1 year rate.
We want to find the 5th month.
Supposedly, 3month of sell rate + 2/9*(1 year - 3month of sell rate)
But answer use buy rate. Why would we want to buy more USD when our purpose is to sell USD?
Ask the Tutor ACCA AFM
Lammer PLC - Forward rate
3y ago#1There is a net payment of $1,150 because they are importing goods and need to pay for them. Therefore they need to buy $'s.
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