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March 2025 ACCA Exam Results

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  2. Sir,

    From the lecture, I understand that we’re not allowed to make future deals on the amount (800,000 pounds) we wish to. Why is that? Is it a rule from a dealer or what?

    Thank you.

  3. The lecture was great, but I am failing to understand why would any financial manager opt for a futures contract to hedge and not go for a forward contract instead since futures require a high degree of speculation? What makes futures more preferable?

    • I do actually explain this in the lectures.

      With forward contracts you have to stick to a fixed date – if the transaction ends up happening earlier or later, then there is a problem.

      With futures, you can close the deal at any time (up to the end of the future) and you are therefore not stuck with a fixed date.

      (I don’t know why you say a ‘high degree of speculation’. The amount is not going to be completely fixed using futures, but it is nearly fixed and is certainly not speculating when used to hedge against risk.)

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