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Forward and money market hedging

Forums › ACCA Forums › ACCA FM Financial Management Forums › Forward and money market hedging

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
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    Posts
  • October 23, 2015 at 9:32 pm #278632
    Chandni
    Participant
    • Topics: 6
    • Replies: 5
    • ☆

    Hey there!

    I was trying to solve questions on forward and money market hedging and i came across such a scenario:

    X Co is a UK co which frequently trades in high tech goods with USA based companies.The following imports and exports are due in 6 months time:
    Halo Exports to Halo imports from
    Co. A 150,000 1,000,000
    Co.B nil 700,000
    Co.C 500,000 400,000

    Exch rates $/Pound
    Spot 1.9966-2.002
    6 months forward 1.9711-1.9755

    Annual borrowing and investing rates available to Halo are:

    Sterling upto 6 months 6.5% – 5.2%
    Dollar upto 6 months 5.0% – 3.0%

    I totally don’t get how to solve this if you can assist please.
    And, in such type of questions, should the workings be shown for each co. separately or merged?

    Will highly appreciate your help. Thanks 🙂

    October 24, 2015 at 8:16 am #278676
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    If you wish for me to answer, then you must ask in the Ask the Tutor Forum – this forum is for students to help each other.

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