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