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Nutourne Dec’18 Q2 AFM

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Nutourne Dec’18 Q2 AFM

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • June 8, 2021 at 12:23 pm #623885
    fahmeedha
    Member
    • Topics: 2
    • Replies: 0
    • ☆

    I would like to thank you for the notes and lectures, I have been preparing AFM with the help of it. I am bit confused with the logic behind while locking the rate using basis , the spot rate of 1.0292 is used , It would be great if you can clarify why did we take lower rate from spot rate

    Thank you

    June 8, 2021 at 3:16 pm #623917
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51576
    • ☆☆☆☆☆

    The examiner has used 1.0292 because they are receiving CHF, therefore if they were converting a spot they would be selling CHF and buying US$ so it would be 1.0292 that would be used.

    You could alternatively use the mid spot rate (as I do in my lectures). Although this would obviously give a different final answer, it would still get full marks.

    If I have misunderstood your question (and therefore answered the wrong question 🙂 ) then please do ask again.

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