[dsodha]

Why does D demonstrate a good control environment?

[dsodha]

So is it correct that eliminating that strategy means implementing a better strategy than the competitor or matching up to the competitor.

But how is this question applied to the prisoner’s dilema.

[dsodha]

Ken, do you mean Kd/risk free rate less the rate of the subsidised loan being the interest on which the shield is calculated?

[dsodha]

Referring to the IRR question above.

Please help me understand why the IRR is lower and not higher than the cost of capital by 1.25%.

Surely to lower the NPV from 100 000 to 0 we have to increase the discount rate so that the PV of the cash flows reduce to make NPV 0.

[dsodha]

Is it the same for currency futures? when you take out a contract (settlement date) and when the contract closes (redeemable date)

[dsodha]

QUESTION:

An interest rate derivative characterised by being available for any amount, redeemable on any date, payment on settlement and traded over the counter, is called?

A. AN INTEREST RATE SWAP
B. A FORWARD RATE AGREEMENT
C. AN INTEREST RATE FUTURE
D. AN INTEREST RATE OPTION

ANSWER : B

My Question:

What is the difference between the redeemable date and settlement date?

[dsodha]

@kengarrett said:

Of course 1545 is 1500 x 1.03,,but all competing goods made in the USA would have inflated by 3% too.

So, in theory no,differemce in competetive position

———————————————————————————————————————-

Is the fact that the price has risen by 3% a negative aspect? The inflation rate is lower than that in the UK – 10%. And also the dollar has strengthened – a positive side

I’m sorry I’m a bit confused. What are the two sides to the competitive position of the UK – the positive and the negative sides. Please can you elaborate.

[dsodha]

So would you say that in your answer, the competitive position of UK would weaken? and how?

I would say no it would strengthen because local goods would be sell more as they will be cheaper than imports and exports would be more competitive. Is that correct?

[dsodha]

Example:

It is now end May 20×4. The company will need to borrow 2 million at end of September 20×4 for 6 months with September futures

My understanding is that the company’s hedging period is from May to Sept (4 months).
But the loan is for 6 months. So how does an interest hedge of 4 months cover up for an interest period of 6 months.

[dsodha]

Actually the whole question is:-

RISK

Invoiced sales may be inaccurately recorded, missed or recorded for the wrong customer.

CONTROL

This includes:-

– perform receivables ledger reconciliation (check info in individual ledger matches that in
nominal).

– perform receivables ledger control account reconciliation.

What is the difference between the above 2 controls?

[dsodha]

Is it correct when I say that we can easily use the lock-in rate $1.3 to calculate the cost or receipt in pound with the hedge, but only when it is a perfect hedge

[dsodha]

Thank you. It’s a bit clearer to me now.

But refering in the example above, is $1.3 the lock in rate even if the hedge is not a perfect size one.

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