Hi
Usually in options when we pay premium for options, we just calculate the premium and convert at spot. We dont' apply borrowing or investing rates, why have we done it here?
Ask the Tutor ACCA AFM
Lignum co Dec 2012
7y ago#1Because the premium is payable immediately rather than at the date it is exercised (i.e. than the date of the transaction).
It is a minor point for the exam, but a nice point to mention.
Sign in to reply to this topic.