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Dear Sir, In 2011 june Session examination question no. 4 named ZPS Co. i got confused about the Spot rate given.
Can you please have a lokk at that? please
I am not sure which bit of it is confusing you.
If you are selling $’s and buying pesos then you convert at 12.500 pesos to the $.
If you are selling pesos to buy $’s then you convert at 12.582 person to the $.It will help you to watch the free lectures on foreign exchange risk management (obviously with the free lecture notes in front of you), because I spend time explaining which rate to convert at and whether to divide or multiply, before going on to go through the techniques of managing exchange rate risk.
It has said that Per$
Spot Rate:peso 12.500-peso 12.582I wonder that, Is that $ which is stronger or Peso seeing this Spot Rate.
as us said in lecture $/pound 1.5572 means
$1.5572= 1Pound,
i cant relate the given Spot Rate as above.In Step 2 of money market hedgeing we have to convert 4819277peso into $ using Spot rate. That means we are purchasing $.Since according to you i need to divide 4819277 by 12.582 isnt it. Make me correct if im wrong Sir.
(Im confused about buying & selling $ concepts)Yes im going through the lectures, the way you teach there is just awesome.
Thank you so much for the support u have been for studying Acca papersIt is not a question of which is ‘stronger’.
There are 12.500 – 12.582 pesos equal to 1 $.
In step 2 of the money market hedging, we are buying pesos (not $’s) so that we can then put the pesos on deposit and then in 6 months time use them to pay the interest.
Because we are buying pesos, we divide by 12.500 to convert to $’s.
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