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Lignum Co(December '12)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Lignum Co(December '12)

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • September 4, 2017 at 11:54 am #405301
    Chidinma
    Member
    • Topics: 10
    • Replies: 16
    • ☆

    Hi John,
    Please explain why they divided the rates by 3 in deriving the forward rate

    September 4, 2017 at 12:30 pm #405333
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    The interest rates given are always yearly rates.

    They need a 4 month forward rate because the payment is in 4 months time.

    So the interest is 4/12 of the yearly rate. (4/12 = 1/3)

    September 4, 2017 at 1:10 pm #405343
    Chidinma
    Member
    • Topics: 10
    • Replies: 16
    • ☆

    Ok thanks.

    September 4, 2017 at 4:55 pm #405397
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Lignum Co(December '12)’ is closed to new replies.

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