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hello sir,attempted p4…Just want to tell you that the examiner was clearly messing around ,
The question 4 was like this
There was a eurozone company and it is now 1 november..okk..then further question says that the internal audit was checking a transaction in which the treasury function manager has hedged the amount and they paid $893000(figure subject to error) payment ….
but he left and is absence they dont know what was the gain and loss on futures…the no of contracts were given that were 57 and also we were told that it was dec futures that they entered….now when i looked under the question ,, only august and october futures given…december was not even written…so what is your opinion on that..contract size was euro125000 and we were given two months forward rate
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Salam Jawad, Dec futures were given dated 1 Aug and 1 Oct. Since hedge was done on 1Aug that was to be taken Dec futures and not the Dec futures dated 1 Oct which was payment date. Question also said that contracts mature every month But only Dec futures were given s had to be taken that only Or work back futures in linear fashion to 31 Oct after the payment date. John sir is it correct?
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In forwards was the least EURO payment
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