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Polytot(06/04 amended)

This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.

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August 28, 2018 at 7:06 pm #469878
niki27
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Dear sir,
I have a doubt from the June 2004 paper qn Polytot
The qn asks to calculate forms of hedging available to the co and calculate revenue to the co as a result of each hedge.
My qn is while calculating the futures, the Kaplan revsion kit has calculated futures hedges on only 60% of the expected receipt ie, $4124236
Why is that so? Why not on 100%? I mean, it can be converted from pesos to pounds to dollars right?
Appreciate if you can help me out
Thanks.
August 28, 2018 at 7:51 pm #469894
John Moffat
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Have you read the second paragraph of the question? 🙂
August 28, 2018 at 9:26 pm #469917
niki27
Member
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Correct me if I get this wrong but if there is an unofficial market that is doing worse than the offical market we are not in a position to consider that in the hedge?
This is confusing me.
August 29, 2018 at 8:37 am #469952
John Moffat
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But the question says that they only have access to sufficient US$ to pay for 60%. So they cannot get any more at the official rate.
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