• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

New! Lectures for ACCA AAA September 2022 Exams are now available >>

New! BPP Books for ACCA September 2022 Exams are now available, get your discount code >>

Exchange rate risk management – Money Market Hedging

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Exchange rate risk management – Money Market Hedging

  • This topic has 3 replies, 2 voices, and was last updated 10 months ago by rishabbohra98.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 14, 2021 at 6:03 pm #631582
    rishabbohra98
    • Topics: 112
    • Replies: 88
    • ☆☆☆

    I did not properly understand example 6 in money market hedging.
    In the end of the lecture you said that we receive 5m in 3 months time, which will repay the 5m borrowed. And then u also said the pound deposit matures and we receive fixed 3223709 pounds in 3 months.
    My doubt is how on earth will we be able to repay the 5m loan borrowed if it is getting converted at spot rate in pounds and then sitting that is invested in Uk bank at an interest of 0.9%.
    Also how will the end result be that we get a fixed receipt of 3223709 , when it should be a loan amount…..

    August 14, 2021 at 6:04 pm #631583
    rishabbohra98
    • Topics: 112
    • Replies: 88
    • ☆☆☆

    I did watch the lecture twice but still confused..

    August 15, 2021 at 12:07 pm #631632
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49602
    • ☆☆☆☆☆

    If we did not do hedging then in 3 months time we would receive $5M and convert it to pounds at spot.

    The money market hedge means what happens is that in 3 months time the $5M received is used to repay the $’s that have been borrowed. At the same time, we receive the Pounds that we have deposited together with interest.

    August 15, 2021 at 2:14 pm #631651
    rishabbohra98
    • Topics: 112
    • Replies: 88
    • ☆☆☆

    Thank you so much sir, happened to watch the lecture again, now i understood it.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Viktoriia.Yanchuk on The Statement of Financial Position and Income Statement (part d)
  • John Moffat on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)
  • ty0311 on The management of receivables – Simple settlement discount – ACCA Financial Management (FM)
  • Manuga on ACCA AB Chapter 18 – The nature of communication – Questions
  • Manuga on MA Chapter 17 Questions Budgeting

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy