Skip to contentSkip to search

Ask the Tutor ACCA AFM

LOCK IN RATE ON CONTRACT AMOUNT

IIbrahim9y ago
Hi, in the OT revision note, in the topic currency rate futures. you mentioned that the lock in rate only applies to the contract amount.The difference between actual and contract amount, either convert at spot on the date of transaction or better use forward rate if available on this amount. my calculation based on the given example, contract amount: 25*62,500*1.5896=$2,483,750 Actual amount =$2,500,000 under hedged amount =$16,250 1.is the above calculation correct as per the example given? 2.at what rate are we converting under hedged amount if forward rate is given ? my understanding sell rate 3.if under hedged amount is converted, am I to add to the contract amount converted to give total receipt? thanks as always
John MoffatJohn MoffatTutor9y ago#1
Yes to all three :-)
IIbrahim9y ago#2
thanks
John MoffatJohn MoffatTutor9y ago#3
You are welcome :-)
Sign into reply to this topic.