Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › ACCA FER Q23 LIRIO CO(MAR/JUN 16)
- This topic has 5 replies, 2 voices, and was last updated 6 months ago by John Moffat.
- AuthorPosts
- May 5, 2024 at 2:24 pm #704964
Question : On LIRIO CO (MAR/JUN 16)
IF exchange rates are $/€1.1585-1.1618
Buy $ @ 1.1585 , Sell $ @1.1618
Buy €@1.1618, Sell €@ 1.1585 ?Premium payable =186 *125,000*0.0290=€674,250
Premium in $=€674,250*1.11618 =$783,344
Should it not be $=€674,250*1.1585=$781,118 AS we are Selling Euro Please help or did I miss understand the buy and selling of Euro as above ?
May 6, 2024 at 8:00 am #704977In order to pay the premium they are having to buy €’s (not sell them) 🙂
May 6, 2024 at 9:02 am #704984Hi John ,
Thank u greatful u responded.
But when they are converting the premium which is in euros to dollars aren’t they selling the euros as above ?
May 7, 2024 at 6:59 am #705037The premium is quoted in €’s per $ in the table, so the amount of the premium is in €’s. Since the company works in $’s they will have to buy €’s to pay the premium.
This is very similar to one of the exercises that I work through in my free lectures 🙂
May 7, 2024 at 10:24 am #705049Thank you so much. I understand now 🙂
May 8, 2024 at 3:31 pm #705111You are welcome 🙂
- AuthorPosts
- You must be logged in to reply to this topic.