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Forex and interest risk

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Forex and interest risk

  • This topic has 5 replies, 2 voices, and was last updated 9 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
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  • November 28, 2015 at 11:10 am #285886
    6shahir
    Member
    • Topics: 202
    • Replies: 296
    • ☆☆☆

    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?

    November 28, 2015 at 11:52 am #285896
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    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.

    November 28, 2015 at 4:34 pm #285974
    6shahir
    Member
    • Topics: 202
    • Replies: 296
    • ☆☆☆

    thnks alot :), but netting how do work on calculations?

    November 28, 2015 at 5:52 pm #285996
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    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.

    November 29, 2015 at 4:17 pm #286165
    6shahir
    Member
    • Topics: 202
    • Replies: 296
    • ☆☆☆

    Thats great, got it thanks

    November 29, 2015 at 4:47 pm #286176
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Great 🙂

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