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forward market hedging & money market hedging

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › forward market hedging & money market hedging

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 4, 2015 at 1:39 pm #280458
    aishakhan89
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    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 pound 150,000 $ 1,000,000
    Co.B nil $ 700,000
    Co.C $500,000 pound 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%

    show how 6 month risk could be managed using
    forward market hedging
    money market hedging

    please help.

    November 4, 2015 at 1:57 pm #280461
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You must watch the free lectures on foreign exchange risk management – both methods are explained in great detail in the lectures (with examples) and I cannot effectively type out the whole lecture here!

    (and I cannot understand why you are attempting questions for which you have no answer!)

    November 4, 2015 at 4:13 pm #280486
    aishakhan89
    Member
    • Topics: 1
    • Replies: 1
    • ☆

    this is my assignment from my college.

    November 4, 2015 at 4:34 pm #280494
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    I am sorry, but we do not provide answers for assignments!

    However if you watch the free lectures on this you should find it easy 🙂

  • Author
    Posts
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