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March 2020

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › March 2020

  • This topic has 5 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • September 5, 2020 at 10:51 pm #583623
    anumfarhan
    Member
    • Topics: 7
    • Replies: 6
    • ☆

    March 2020
    Q2b. Boullain.
    When we convert currency to find number of contracts we use the futures price to convert right which is 1.422 September rate? But what did they do in the answer scheme?
    c. What is the $20?

    Q3ai. Hathaway.
    Why is there no Y0 and why from Y1-5?
    iii. What is 4.968 and where did it come from?

    Thank you for the help in advance! 🙂

    September 6, 2020 at 10:55 am #583662
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    Q2b. We have no choice but to use the lock-in rate for the futures (because, as I explain in my free lectures) we do not know either the spot rate or the futures price on the date of the transaction. The lock-in rate is 1.1431

    Q2c. $20 is the tick amount. 0.0001 x $200,000. i.e. the gain or loss for 1 tick movement on 1 contract.

    Q3ai The question says that the project will commence immediately the regulator gives approval which will be in 1 years time.
    iii. 4.968 is the 8 year annuity factor at 12% and comes from the tables provided.

    September 6, 2020 at 3:53 pm #583692
    anumfarhan
    Member
    • Topics: 7
    • Replies: 6
    • ☆

    Sorry sir but then what is 1.1422? I chose September so isn’t 1.1422 the rate to use for calculating number of contracts?

    September 6, 2020 at 4:57 pm #583702
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    1.1422 is today’s price of September futures and the price will have changed by 31 August.

    The lock-in rate gives the overall effect as at the date of the transaction on the contract amount, and therefore the lock-in rate is also use to determine the number of contracts.

    Have you watched my free lectures on this?

    September 6, 2020 at 6:42 pm #583714
    anumfarhan
    Member
    • Topics: 7
    • Replies: 6
    • ☆

    okay I think I understand. No I have not, will do that too. Thank you.

    September 7, 2020 at 9:35 am #583744
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54721
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘March 2020’ is closed to new replies.

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