Comments

  1. avatar says

    Hi Sir,

    At the end of the lecture it state that future is only suitable for large amount hedging, since there is no point gambling 62,500 pound which is larger than the hedge. I was wondering the contract currency of 62,500 pound is it the deposit to make a deal in futures?

    • Profile photo of John Moffat says

      Dealing in a future of 62,500 means you are at risk on 62,500. The object is to ‘cancel out’ the risk on the transaction itself. So if the transaction was (say) only 5,000 then dealing in a future would be increasing the amount at risk!

      The deposit/margin doesn’t itself affect the risk at all. The amount required is up to the dealer to decide, but is likely to be around 30%.

  2. avatar says

    Hi John

    After your examples and work through i got a confident, that was until i attempted to do Q2 of June 2011, the whole exchange rates got me confused again. Any comment/tricks on this particular questions, how i should go about it in the exam, if presented in such a way like this

  3. Profile photo of deepmaharaj says

    Very Nice.Lecture. God bless me. Kindly explain if we are given 2 futures rates ( as was given in recent exam)

    Open Rate
    Settlement Date

    You told us to take Open Rate for buying future and Settlement Date for selling future. Have I understood it correctly ! Kindly comment.

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