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Hello,
when answering question 3 part (a) of the December 2018 question paper, I calculated the payoff matrix in the currency of Kayland (K$) not in D$. However, the results (products chosen by each of the stakeholder groups) are the same. Would it be regarded as correct? I wanted to avoid translating material costs from K$ to D$ and assumed that no matter what currency I (consequently) use, the highest profit figure will still be the best outcome.
Thank you for advice!
JustynaThat would ignore the FD’s forecasts about the exchange rate changes – and makes you calculations much simpler.
I think the examiner meant you to use expected values to work out the income in the home currency. Your answers might result in the same choices, but that is accident/good luck.
Yes, I’m pretty sure that the examiner assumed all the calculations will be done for home currency. But still I feel that my approach will always end up with the same result – but much less calculations. I included the exchange rates forecasts as I had to translate costs from home currency to K$.
Anyway, in case a similar question appears on the March exam, I would take the longer path just to make sure I earn some marks 🙂
Thank you!
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