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Rate assumption in basis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Rate assumption in basis

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • September 5, 2018 at 4:59 pm #471630
    hemraj123
    Member
    • Topics: 110
    • Replies: 188
    • ☆☆☆

    Sir, when calculating the future spot rate or futures price in basis calculation for explaining the outcome, different assumptions are used in different questions.

    Sometimes it’s the forward rate as the future spot rate, or spot price changed by the basis points to reflect the change, or futures price adjusted by basis points.

    Which assumption would u recommend to be used in exam?

    And if I do use another rate, should I just mention the rate is assumed? Do I have to justify the rate chosen?

    Thanks.

    September 5, 2018 at 6:20 pm #471675
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    It depends on the information given in the question.

    For futures, we would normally use the lock-in rate as explained in my free lectures.

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  • The topic ‘Rate assumption in basis’ is closed to new replies.

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