Hi friends,
Please help me
when to use this two formula?
Formula No 1 : Forward Rate - Spot RAte/Forward RAte
Formula No 2 : Spot rate - Forward RAte/Spot Rate
PLease give ur suggestion
CS BHAVIK HARSHAD SHAH (Company Secretary) (1662 Points)
07 October 2012Hi friends,
Please help me
when to use this two formula?
Formula No 1 : Forward Rate - Spot RAte/Forward RAte
Formula No 2 : Spot rate - Forward RAte/Spot Rate
PLease give ur suggestion
Mandakini
(CA )
(422 Points)
Replied 07 October 2012
Assuming Rs.50 per Dollar,,
We use formula no.1 (F-S/S)*(12/n)*100 to know the currency appreciation or depreciation of dollar.
We use Formula 2 to know app/dep of rupee.
CA Ashish Pathak
(Employed at Cipla Ltd.)
(2779 Points)
Replied 07 October 2012
CA Ashish Pathak
(Employed at Cipla Ltd.)
(2779 Points)
Replied 07 October 2012
Back in the Game
(a)
(1273 Points)
Replied 07 October 2012
Firstly its not a Formula rather logic.
The issue is that in case of First Formula u r Finding out the premium or discount considering Forward rate as base which is inappropraite.
in second u r considering Spot Rate as base..
Tats it.
usually u wanna knw premium or discount from Spot rate perspective..
(40-32)/32=25%.
u say $ has gone on premium ,how.
i e 32 *1.25=40.
as simple as tat.
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