1. Profile photo of Sam says

    why have we calculated the 2M forward difference as 0.0083-0.0092 although there is no c next to the figures in the question!!!

    As you mentioned in the previous question that when c is mentioned .. this means the difference is in Cents !!

    • Profile photo of John Moffat says

      In practice they do not write c against it – in practice it is always quoted in the lower unit of currency (in this case cents) when given as a difference from spot. (The only exception is Yen, but this is not relevant for the exam)

      (In fact, the current examiner usually gives the forward rate directly rather than quote it as a difference from spot, and so the problem does not tend to arise these days in the exam.)

    • Profile photo of John Moffat says

      what do you mean, where is it?

      It is futures contracts that you close out (not forwards), and closing out means finishing the deal (if you buy futures then you have to sell them at a later date; if you sell futures then you need to buy them at a futures date)

      Calculations on futures cannot be asked in F9 – you can only be asked to describe how they work.

      • Profile photo of John Moffat says

        If you look at the contents list on the first page of the Course Notes you will find ‘foreign exchange risk management’. It is in there!

        You will find the links to 7 lectures on Foreign Exchange Risk Management on the main F9 page of this website.

  2. Profile photo of sgsii says

    I keep getting the following error:

    Server not found: rtmpt://

    Was in the middle of the video. Usually it’s OK, but once in a while I get this message.

    The lectures themselves are very helpful. I huge thank you to John an to this site!

  3. avatar says

    I am not understanding, so he is buying in dollars, therefore I would have thought that he should receive the less money, being 1.4970 rate totalling £133600.53 and not the higher amount £134138.16 as the bank is not benefiting from this, but I am.

    Have i got this wrong ?

    • avatar says

      @fenechbrian, Hi Brian, you said “he is buying in dollars”. This is incorrect, the lecturer said we assume the company is in the Uk unless told otherwise, so we are buying Dollars, not buying IN Dollars, and we are buying with Pounds. Therefore use the Company is buying/selling rule, which will give you the correct figure.

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