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I want to be explained more about the mean of the assumption: “margin requirement may be ignored” in some BPP Kit problems about exchange rate risk management such as problem 60, 61 page 59.
Thank you!The margin is the initial deposit that has to be paid when you start a futures deal. This deposit is returned at the end of the deal, but obviously you are losing interest on the money while it is on deposit with the dealer.
This is all explained in my free lectures on foreign exchange risk and interest rate risk.
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