Skip to content
Sign inRegister
ACCA exam results — Are you ready?Chat about it >>

Ask the Tutor ACCA AFM

lignum

ACCAanonymousACCAanonymous4y ago
1-Forward rate = 142 × (1 + (0.085 + 0.0025)/3)/(1 + (0.022 – 0.0030)/3) = 145.23 please explain why are we dividing it by 3 .
John MoffatJohn MoffatTutor4y ago#1
The interest rates given are (as always) annual rates. The transaction is in 4 months time, and there are 3 periods of 4 months in a year. So we divide by 3.
Sign in to reply to this topic.