future contract hedge — OpenTuition Forums

CCandy11y ago

Dear Sirs, Referring to open tuition lecture notes, p93 or chapter 18 example 9. Would like to know why we need to convert the amount receivables at spot first? Because referring to answer in p149 when we calculate the underlying transaction at spot plus the profits on future, the net receipt is less than the amount convert at spot? with future hedge net receipts is 794,005, but when we convert at spot at the beginning is 794,176.

John MoffatTutor11y ago#1

You don't need to (unless the question asks you to, or unless you are asked to calculate the hedging efficiency, which is less likely to be asked). I do assume you are watching the lectures that go with the notes, because I do explain this in the lectures (and there is no point in using the notes without the lectures).

CCandy11y ago#2

Thanks, I will check out the video again.

John MoffatTutor11y ago#3

Ok :-)

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