It is the missing figure to make sure that both parties end up paying 0.75% (half of 1.5%) less than they would have been paying if they did their own borrowing.

(However do appreciate that you cannot be asked for calculations on swaps in the F9 exam – you are only expected to be aware of them).

Sir i don’t understand why do we sell futures (interest rate futures)and then buy. Why cant we buy first and then sell on the day of the transaction like we did in foreign risk management ( currency futures) or other way round for currency futures( why cant we sell first and then buy?) Please help

Sir, watched your lectures for the second time on exchange rate risks as i have exam after a week almost. then watched this video for interest rate risk. what i understood from exchange futures example can be briefly worded as: we buy futures (virtually) of the amount of foreign currency we need to pay in future. wait till the date when we actually need to make the payment. if exchange spot rate rises on that day the future rate will too rise. we simply convert using the spot rate and ask the futures dealer to sell the futures we bought earlier. the profit we make by selling futures at high price cancels the loss we make by paying at high rate. FIRSTLY AM I RIGHT AT THIS?

after watching all the videos for foreign exchange risks, watched this video too.. understood everything until you talked about interest futures. listened to it twice and could learn as stated below (briefly): if we are to take a loan in future off 800$ (2 months later) , interest rates maybe anything at that time, we simply keep it at risk and buy interest rate futures today. after two months, the day when we need loan, if there’s a rise in interest rate (hence, loan will cost us higher) there will be reduction in futures prices and a fall in interest rates increases futures prices. how does it save us sir? i listened to it so carefully again and again but couldn’t understand it. Can you please help me. what did you mean, when you said we start a deal today end it on the day when we need loan? i have read the technical article relating to the topic also, still couldn’t understand.

I have just attended F9 examination.Almost every question is included in your lecture.And I feel Section C is easy to answer because you have made it very clear.I have confidence in passing F9.Really appreciate your help!

John! You’re the best! I just finished my f9 paper today and I’m soo confident that I’ll clear it. Can’t wait for results to come out? The Lecture videos helped me a million! I owe all my marks to you. Thanks again π Cheers!

Some Companies in Viet Nam are now using forward and swaps for foreign currency for hedging exchange rate, and using CCS for interest rate hedging. I didn’t understand what they are, and how can they combine together to hedging the risks for interest rate and foreign exchange rate..

in your lecture, you talk about forward, swap, and interest rate hedging briefly and quickly. you don’t mentioned calculation detailed and clearly. So, could you please help me to make me clear about using CCS for hedging of risk of interest rate, and combine using swap and forward for hedging risk of exchange rate,and to calculate them. if you have any materials that mentioned these above, could you please give me for my studying with many thanks.

my company is tending using above instruments for hedging risks, but i am still not clear about these, and didn’t know how to apply these instruments well. My company have export revenues in USD, and also make loans from bank.

Tearcher, Could you please help me. I am very appreciated from your help.

Dear John First of all ,thanks for all the amazing lectures. I have just completed watching all the lecture of F9. You have really made the topic very simple and easy to understand. Also a really great thing is that you are offering these lectures free of cost to all the students out there. Appreciate you for doing that. PS. You are an amazing teacher.

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twilight1987 says

Hi Sir,

In the last question on interest rate swaps β how did you get 2.75%?

Regards,

John Moffat says

It is the missing figure to make sure that both parties end up paying 0.75% (half of 1.5%) less than they would have been paying if they did their own borrowing.

(However do appreciate that you cannot be asked for calculations on swaps in the F9 exam – you are only expected to be aware of them).

rakhi2rakhi says

Sir i don’t understand why do we sell futures (interest rate futures)and then buy. Why cant we buy first and then sell on the day of the transaction like we did in foreign risk management ( currency futures) or other way round for currency futures( why cant we sell first and then buy?)

Please help

nadia says

Sir, watched your lectures for the second time on exchange rate risks as i have exam after a week almost. then watched this video for interest rate risk. what i understood from exchange futures example can be briefly worded as:

we buy futures (virtually) of the amount of foreign currency we need to pay in future. wait till the date when we actually need to make the payment. if exchange spot rate rises on that day the future rate will too rise. we simply convert using the spot rate and ask the futures dealer to sell the futures we bought earlier. the profit we make by selling futures at high price cancels the loss we make by paying at high rate. FIRSTLY AM I RIGHT AT THIS?

after watching all the videos for foreign exchange risks, watched this video too.. understood everything until you talked about interest futures. listened to it twice and could learn as stated below (briefly):

if we are to take a loan in future off 800$ (2 months later) , interest rates maybe anything at that time, we simply keep it at risk and buy interest rate futures today. after two months, the day when we need loan, if there’s a rise in interest rate (hence, loan will cost us higher) there will be reduction in futures prices and a fall in interest rates increases futures prices.

how does it save us sir? i listened to it so carefully again and again but couldn’t understand it. Can you please help me. what did you mean, when you said we start a deal today end it on the day when we need loan? i have read the technical article relating to the topic also, still couldn’t understand.

John Moffat says

You must not ask great long questions like this as a comment on a lecture.

Please ask it in the Ask the Tutor Forum.

nadia says

as i wanted to relate my question to specific video in this page so asked here. sorry sir. will ask it in tutor’s forum. i apologize for it π

John Moffat says

No need to apologise π

ewaacca says

brilliant lectures !!! you are the best !!

John Moffat says

Thank you very much for the comment π

blackbirdhey says

Thank you Sir for your amazing lecture

John Moffat says

And thank you very much for the comment π

blackbirdhey says

I have just attended F9 examination.Almost every question is included in your lecture.And I feel Section C is easy to answer because you have made it very clear.I have confidence in passing F9.Really appreciate your help!

John Moffat says

Thank you for the comment, and I am really pleased that my lectures were of help π

annian says

Thank you for all these beautiful and clear lectures, you have such e gift Mr Moffat.

Please, never stop teaching π

John Moffat says

Thank you very much for the comment π

ashishhegde says

John!

You’re the best!

I just finished my f9 paper today and I’m soo confident that I’ll clear it. Can’t wait for results to come out?

The Lecture videos helped me a million!

I owe all my marks to you.

Thanks again π

Cheers!

John Moffat says

Thank you very much for the comment π

Skipper says

Amazing teaching! This paper used to be a real pain before we found you! You’ve made this paper easy as pie! Thank you so much John!

John Moffat says

Thank you for the comment π

khanhhoangvu says

Dear Teacher,

Some Companies in Viet Nam are now using forward and swaps for foreign currency for hedging exchange rate, and using CCS for interest rate hedging. I didn’t understand what they are, and how can they combine together to hedging the risks for interest rate and foreign exchange rate..

in your lecture, you talk about forward, swap, and interest rate hedging briefly and quickly. you don’t mentioned calculation detailed and clearly. So, could you please help me to make me clear about using CCS for hedging of risk of interest rate, and combine using swap and forward for hedging risk of exchange rate,and to calculate them. if you have any materials that mentioned these above, could you please give me for my studying with many thanks.

my company is tending using above instruments for hedging risks, but i am still not clear about these, and didn’t know how to apply these instruments well. My company have export revenues in USD, and also make loans from bank.

Tearcher, Could you please help me. I am very appreciated from your help.

Thanks Teacher.

John Moffat says

What is in the lecture is what is needed for the ACCA exam. I am sorry but we cannot give practical advice in addition.

gouthamjp94 says

Dear John

First of all ,thanks for all the amazing lectures. I have just completed watching all the lecture of F9. You have really made the topic very simple and easy to understand. Also a really great thing is that you are offering these lectures free of cost to all the students out there. Appreciate you for doing that.

PS. You are an amazing teacher.

John Moffat says

Thank you very much π

Luke says

Hi,

Is it still the case that this topic hasn’t been asked and if it does come up that it can only be a theory based question?

John Moffat says

It has been asked, but only as a written questions. You cannot be asked calculations on interest rate risk in paper F9.

Luke says

Thanks very much for the reply John.

naynayeaint says

Thank you very much for your great lectures sir. I did well on my exam. ?

John Moffat says

You are welcome, and I am pleased that you did well π