Can you explain the (e) last paragraph
Ask the Tutor ACCA FM
Pilot paper 2006 Nedwen company
Have you watched the free lectures dealing with exchange rate futures?
As the pound strengthens (and therefore the dollar weakens), the receipt will convert to fewer pounds and they will lose money.
At the same time, the future price will fall. So if they sell futures now and then buy back later at a lower price, then they will make a gain which will compensate for the loss they make on the transaction.
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