Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Q40 Buryecs
- This topic has 8 replies, 3 voices, and was last updated 2 weeks ago by
John Moffat.
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- June 4, 2023 at 3:04 pm #685982
Dear sir,
I don’t understand why in (c), the answer used put options instead of call options.
If the government buy back the franchise, shouldn’t that $7500m be converted into Euro using call options? Since Buryecs is based in Eurozone, and it should be selling Dollars and buy Euro (so call options).
June 4, 2023 at 3:21 pm #685990The options are $ options. They are selling $’s and so they are put options in $’s.
June 5, 2023 at 4:06 am #686008But why does it convert to $ when in the question, the options are in Euro?
June 5, 2023 at 7:41 am #686023The question does not say that.
It says that they are over the counter options in $’s.
June 5, 2023 at 8:29 am #686030I thought the question said “The exercise price quotation is in Wirtonia $ per €1, premium is % of amount hedged, translated at today’s spot rate.”?
Since it’s per €1, is this not a Euro option?
June 5, 2023 at 4:45 pm #686070But the question says “….OTC options in Wirtonia $’s” which means that they are options to buy or sell Wirtonian $’s.
August 12, 2025 at 8:53 am #718725ah I see. So the trick here is to always look at what currency the contracts are denominated in (the words of the qn), rather than guessing or inferring from the option table?
August 12, 2025 at 8:53 am #718726ah I see. So the trick here is to always look at what currency the contracts are denominated in (the words of the qn), rather than guessing or inferring from the option table?
August 12, 2025 at 5:15 pm #718730Correct 🙂
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