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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Tick value
Dear sir,
I am a bit confused with determination of tick value.
In this lecture you explained how to determine a tick value.
https://opentuition.com/acca/afm/foreign-exchange-risk-management-1-part-8-acca-afm-lectures/
Seems logical that it should be contract size X tick size.
However, the confusing comes with the real questions. For example 45 Daikon (6/15)
It is said contract size 1,000,000
Tick movement 0.01%
Tick value $25
How come tick value is $25 if it should be calculated as 1,000,000 X 0.01%?
You are forgetting that given they are always 3 months, we divide by 400.
So with a contract of size $1,000,000, the value of a 1 tick movement is
0.01 x $1,000,000 / 400 = $25.