Hello Sir,
Is it ok to calculate spot mid rates from the spread and use them it throughout the calculations though not required the question and state our assumptions at the beginning. Is it a good exam technique to save time or potentially disadvantegous ? Could you suggest please. Thank u
Ask the Tutor ACCA AFM
Spot Mid rates
9y ago#1It depends what you are being asked to do.
If it is simply converting a reciept or a payment in a foreign currency then you need to use the correct buy or sell rate, not the mid market rate.
If it is deciding how many futures to deal in, then OK you can use the mid-market rate.
You certainly cannot use it throughout all the calculations at all.
I do suggest you watch my free lectures on foreign exchange risk management and interest rate risk management. They are both essential topics and the lectures explain exactly how they work.
This topic is locked — no new replies.