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Dear Sir,
Please kindly let me know the following question.
In Open tuition free notes, Chapter 18, e.g11
Why the tutor chose the two exchange rates when calculating the net receipt.
Underlying transaction: 1.4791 and profits on future: 1.4812.
Could we use the same rate 1.4791 as we made two transactions the same day and same type of transactions (buying)?
In e.g 9, the rate has been used in calculating is the same rate 1.5190 for underlying transaction and profit on future.
Thanks
LynIn future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
The transaction involves buying $’s and therefore the relevant exchange rate is 1.4791.
The profit on the futures is a receipt of dollars and therefore we sell dollars and the relevant exchange rate is 1.4812.
In fact, what we could do is use the $ profit from the futures to pay some of the dollars owing, which would mean then buying fewer dollars – this would be the same as converting the profit on the futures at 1.4791.
(It seems as though you might be using the lecture notes without watching the lectures, which would be pointless. I work through the examples in the lectures, and explain. If you are not watching the lectures for any reason then you must buy a Study Text from one of the ACCA approved publishers and study from there.)
Thanks for your clarification!
When I asked the question, I have already looked BPP Text. But I haven’t yet watched your lecture for that. However, I have watched your lecture after seeing your replying.
Your lecture is clear for my confused.
For future asking, I must choose the tutor forum as I have to use this forum in previous time for the tutor forum was temporary unavailable due to technical error or network error.
Thanks,
Lyn
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