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Hi Sir, may i know when calculate the number of contracts for futures, why is it the rate use is the predicted futures rate (after 4 months) instead of just divided it by the June rate?
It is the lock-in rate, which as I explain in my free lectures gives the net effect of converting the transaction at spot and any gain or loss on the futures.
(However it is a very minor point for the exam and in most cases you would end up with the same number of contracts anyway)
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