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nutorne co

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › nutorne co

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • November 30, 2021 at 9:41 am #642075
    mehazia
    Participant
    • Topics: 54
    • Replies: 6
    • ☆☆

    calculation of futures price
    Predicted futures rate at the end of May = 1.0292 + (6/7 × (1.0369 – 1.0292)) = 1.0358 (when the June futures contract is closed out in May).

    we always generally take mid point for spot for the calculation of the same be it with or without the lock in style of approach.
    right?
    but in this situation they just took the borrowing rate while calculating the basis.why? and doing it in the mid point approach is giving a -ve value too, how to go about with the answer.
    And
    isnt it supposed to be 1/7 as the ratio as from May to June 1 mnth duration and a total of 7 mnths?
    why is it 6/7 in the answer.

    November 30, 2021 at 9:56 am #642078
    mehazia
    Participant
    • Topics: 54
    • Replies: 6
    • ☆☆

    30 nov 31 may 30 june
    mid point 1.03005 1.03494 0
    futures 1.0369 1.03592 0
    1/7 -0.00685 -0.00098 0
    7 mnths 1 mnth
    this is the answer i got is it ok …or its fine..
    I follow the method you teach only.

    please help.
    thank you

    November 30, 2021 at 3:59 pm #642110
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51585
    • ☆☆☆☆☆

    Yes, that does seem fine 🙂

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