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Hi sir, for the answer Appendix 1 (Part (c) (i), why do we need to change the rate of currency futures to 6 months and no need to change the 7months to six months for currency option?
For futures we calculate the lock-in rate that will apply in 6 months time (which gives the net affect of converting the transaction at spot, together with the gain or loss on the futures), as explained in my free lectures.
As far as options are concerned we are using the 7 months options given in the question, which are excercisable in at any time up to 7 months.
Thank you Sir, and for the same question, there is this working 2 : Exchange rate ARD/JYP . i dont understand where did all those figure came from.
See me answer to a previous post about this:
https://opentuition.com/topic/cross-spot-rate/
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