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Foreign exchange risk management (1) Part 7 – ACCA (AFM) lectures


Reader Interactions

Comments

  1. i.dislike.tax says

    September 1, 2023 at 12:35 am

    Hello John.

    Why is it that on the date of the transaction we divide by the lower rate, i.e., 1.4791 to convert to spot, but then while calculating the profit, we divide by 1.4812?

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    • John Moffat says

      September 1, 2023 at 4:01 pm

      To pay the supplier we are buying $’s and so convert at 1.4791.

      We are receiving a $ gain on the futures therefore we need to sell $’s and so convert at 1.4812.

      (What they could do is use the $ gain on the futures to part pay the $500,000 and so only the net $ amount would need to be converted at 1.4791). Either is acceptable in the exam.

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  2. jacinththomasjohn@gmail.com says

    June 2, 2023 at 3:33 pm

    that was amazing, just one doubt , at the end while we convert the profit to pounds should we use the buy rate ie the smaller rate or sell ie the higher rate ? , as in this case we need to pay dollars hence buy dollars and sell pounds so shouldn’t we be using the buy rate for that conversion?

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    • John Moffat says

      June 3, 2023 at 6:57 am

      The profit is calculated in dollars and so to convert it to pounds we need to sell dollars and buy pounds.

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  3. kasobi says

    March 9, 2023 at 4:48 pm

    I’m so much enjoying the lecture. Thanks John

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    • John Moffat says

      March 10, 2023 at 8:26 am

      Thank you for your comment 馃檪

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  4. Joseph says

    March 5, 2023 at 12:55 pm

    What a great lecture! Thanks John

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    • John Moffat says

      March 5, 2023 at 4:05 pm

      Thank you for your comment 馃檪

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  5. abokor says

    October 20, 2022 at 1:00 pm

    Thanks to you, AFM finally makes sense to me.

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    • John Moffat says

      October 20, 2022 at 4:05 pm

      Great 馃檪

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