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Q1) Under Forex, the examiner will ask calculations only on both forward and money market hedges ryt?
Q2) Under interest risk, the examiner wont ask any calculations but we should know the theory FRA IRG INT Futures and options ryt? including swaps also?
What more can the examiner test on both these topics?, I have watched your lecture just a doubt pls help?
1. Correct (and netting as well, but that is easy and obvious)
2. Correct – no calculations, but being aware what they are.
3. He also expects you to know about foreign exchange futures and options, but there will not be calculations on these.
If the is a payment of $100 in 6 months time, and a receipt of $70 in 6 months time, then you simply net them off and you are at risk on a net payment of $30 in 6 months.
It is on this $30 then you would then look at forward rates or money market hedging.
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