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@David Harper CFA FRM Much gratitude. Again such a key insight i) Swap Cash Flows always based on Discrete Rate not Continuous which completely makes sense intuitively as well !! and ii) That Discount Factors never lie - so it does not really matter how we calculated the DF - Discrete or...

Got it :-) @David Harper CFA FRM Thanks so much for the clarity on this ! :-)

@David Harper CFA FRM Hi -Hope you all had a Happy and blessed Easter ! I was re-visiting this topic and this revised example... in this example, why are are we discounting at Year 0 instead of Year 1...? The above explains that- " The question concerns a 10-year swap that defaults at the...

In reference to R19.P1.T3.FIN_PRODS_HULL_Ch7_Topic:Interest_Rate_Swap_Valuation:- Hi- Happy Easter everyone ! Have a quick question on the example illustrated below which I was revisiting.. In the FRA Method of IRSwap Valuation:- i) We calculated/extracted the "Continuous"-Forward Rates. ii)...

@David Harper CFA FRM Thanks a million for the explanation on this - reading the above also struck a point in my head that we factor in the Lease Rate in the price of the Futures/Forwards Contract while the Expected Spot Price is calculated based on the Growth Rate.

@ShaktiRathore Thanks Shakti- so unfortunately, that's what is adding to my confusion as to why we have used S0. e^ (GrowthRate)*Time when we should have used S0. e^ (GrowthRate+LeaseRate)*Time where we have a "Non-Zero" Lease rate of 1 % in BT Notes McDonald Ch 6 Arbitrage Transaction in...

@David Harper CFA FRM Thanks a trillion Quantrillion (if there was such a thing ! :-) I see the point I was overlooking ! Thank you ! Any discussion with you is such an AHA moment !

@ShaktiRathore Have a follow up question on this issue..I was trying to point to this youtube tutorial resource by David on Normal Backwardation(listed below) where it was stated that the Expected Spot Price E(St) = (S0). e ^ (Commodity Discount Rate) -----Formula I But in the example...

@David Harper CFA FRM Thanks David for sharing this insight ! :-)

In Reference to R20.P1.T3.FIN_PRODS_McDonald_Ch6_Topic: Cash_Flows_Arbitrage Transaction in Commodity Forwards:- Hi, I having some trouble wrapping my head around the Cash Flow depicted below:- The Short Forward Payoff is ( K-St)= ( 11- 10.5127) So the money that we spent in buying the Spot is...

@ShaktiRathore Thanks a million Shakti for sharing your insights on this :-)

In Reference to R20.P1.T3.FIN_PRODS_McDonald_Ch6_Topic: Arbitrage Transaction in Commodity Forwards In the example illustrated below, Expected Spot Price E(St) = (S0). e ^ ( Expected Growth Rate) But Isn't Expected Spot Price E(St) = (S0). e ^ (Commodity Discount Rate) ...? Much gratitude for...

Please add me +19173627420

In Reference to R20.P1.T3.FIN_PRODS_McDonald_Ch6_Topic:Strip Hedges:- Hi, For Stack Hedges, BT notes state that "If the forward curve gets steeper, the stack hedger may lose. On the other hand, if the forward curve flattens, then the stack hedger gains because he/she has locked in the commodity...

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@ShaktiRathore Thanks so very much Shakthi for the insight on this :)

In Reference to R19.P1.T3.FIN_PRODS_HULL_Ch5_Topic:CONTANGO_BACKWARDATION_FUTURES_PRICES_SPOT_PRICES:- Quick question while am on this topic -- Over time, the Futures Prices converge onto:- a) The "Expected Future Spot Prices-E(St)" at time= the Delivery Date..? OR b) The "Actual...

Thanks so much @ShaktiRathore for correcting my thought process on this ...I see what you're saying...Avg of Strike Prices kinda does not make sense any way cause it is supposed to be a predetermined threshold level/value...So as a follow up question on this...for Avg Strike Asian Options, do we...

In reference to R19.P1.T3.FIN_PRODS_HULL_Ch26_ExoticOptions_Topic: Asian-Options:- Should the Avg-STRIKE Call PayOff be = MAX [ 0 , ( St - AVG-STRIKE-PRICE) ] instead of MAX [ 0 , ( St - AVG-STOCK-PRICE) ...?

@David Harper CFA FRM Got it !!!!!! Thanks a ZILLION ! Every time is such an AHA moment - almost get goosebumps each time. You guys are undoubtedly the GURUS :cool: at this stuff !!!!!!!!!!!!!!!!!!! :rolleyes::)