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Hello Mr.John,
When calculate futures price at answers booklet(2nd method)- its been used spot rate 1.0292 to derive lock in rate, instead of mid rate (1.0292+1.0309)/2 = 1.0301 . But at your lecture you said to use mid rate. please kindly clarify. which one should i use ?
by using mid rate i got different answer than answers booklet. when i use 1.0292 i got exactly same answers as answer booklet.
thanks
hamjathIt is arguable as to which is the better rate to use.
The current examiner does tend to use the relevant spot rate (rather than the mid-market rate), but it is equally valid to use the mid-market rate.Obviously this results in a different final answer, but there is rarely just one correct answer in Paper AFM for any question and you would still get full marks (provided, as always, that your workings are clear for the marker because it is the workings and not the final answer that get the marks 🙂 )
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