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Hello Sir, after watching this lecture, https://opentuition.com/acca/afm/foreign-exchange-risk-management-1-part-8-acca-afm-lectures/
I still have doubt about the lock-in rate. Why the rate can get a net effect on the closing date(future and transaction date) by only multiplied to total contract amount? What is the logic behind and I can’t understand it, hope tutor can clarify it, Thank you.
You will have obviously watched the earlier lectures first and therefore understood that because of the contract size, the amount on which the futures gain or loss is calculated will not be exactly the same as the amount of the transaction itself.
The lock-in rate gives the net effect of converting the transaction at the closing rate together with the gain or loss on the futures, but for the same reasons this will only apply the number of contracts times the contract size.
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