Hello all,
How do we take daily FX and bond prices for Accounting purposes? I mean, like for stocks it’s easy because you can just take the day end price but FX is traded 24/7. How you select one single FX rate for the day?
And similarly how do you determine the market rate for bonds especially if the bonds are traded over a dealer network?
Thanks
FX - Last price for the day
Bond - Latest available quote
Can you please elaborate on that? How would you determine which is the last price for the day?
It would be the last quoted price on the day for the account you wish to close. i.e. if you want your account value as of 31 Jan 2014, you would take the last available quote in your forex market for that day.
Since markets are ‘live’ throughout the day, you would get a quote that corresponds with the end of 31 Jan 2014. Whether or not you take it at 23:59hrs or 17:00hrs or any other time would depend on your company’s operating or accounting policy. I believe this in turn would be governed by the relevant accounting body where you do business in.
If I am wrong, someone please feel free to correct me. I am not an expert in accounting issues as that is not my job scope but my thorough understanding based on my experience so far suggest that this is basically how its done.
My understanding is that data services providing daily quotes, basically take the last quote as of a specific time every day. For things that are traded 24/7, that quote time can vary from service to service, but it is typically linked to a major public stock exchange in order to facilitate usage with varied securities. You will need to check with your data provider as to what the cutoff time is.