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MJ21 Gogarth Hedging strategy

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › MJ21 Gogarth Hedging strategy

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
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  • June 24, 2023 at 4:51 am #687378
    phuongmore
    Participant
    • Topics: 131
    • Replies: 128
    • ☆☆☆

    I see the answer in MJ21 Gogarth, question on Hedging strategy and find that after each calculation, there is discussion on it.

    For example:
    [Calculation] Net receipt : $37.4m – $14.5m = $22.9m
    [Discussion] The net receipt is $22.9 (see working)

    [Calculation] Forward contract : $22.9/0.2374 = MR 96.4m
    [Discussion] The receipt from a forward contract would be MR $96.4m

    [Calculation] Futures …
    [Discussion] 193 Sep contract to buy MR are required (see working)
    This leaves a small amount of over hedge currency which can be hedged at the forward rate, giving a net receipt of ….

    I wonder if I only calculate without discussion, would I award full mark ?

    Of course, I will include an separate section which advise and recommend an appropriate hedging strategy,

    Thank you

    June 24, 2023 at 4:30 pm #687397
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54832
    • ☆☆☆☆☆

    Provided that you are advising and recommending based on your calculations, then you would get full marks (provided obviously that your calculations were correct and that your advise and recommendations were sensible based on your calculations 🙂 )

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