I am a little confused about how options are treated in the exam. I have just done an example question (Cocoa-Mocha-Chai) on FOREX hedging and options are treated as if they are options on the currency itself, but other questions (Lurgshall Co) treated interest rate options as options on futures contracts.
I asked Grok about this and was told that AFM always treats interest rate options as options on interest rate futures, but not so with FOREX options.
Is that true?
Ask the Tutor ACCA AFM
Options on futures?
23d ago#1Yes it is true.
Have you watched my free lectures on both interest rate and exchange rate risk where all of this is explained in detail?
Also, we have free lectures working through the question you refer to in full.
I have, but I must have missed that part, there is a lot to take in!
Thank you for your help, as always.
20d ago#3You are welcome :-)
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