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Question 1 in Sept 2018 exam

Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › Question 1 in Sept 2018 exam

  • This topic has 0 replies, 1 voice, and was last updated 1 year ago by ivanovrita86.
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  • May 28, 2021 at 8:57 pm #622091
    ivanovrita86
    Member
    • Topics: 15
    • Replies: 19
    • ☆

    Hey guys,

    does anybody understand the answer to the following actually easy question?

    80m EUR receivable in 6 months time.

    Currency Futures (contract size EUR 125,000, quotation JPY per EUR 1):

    Four-month expiry 126.9
    Seven-month exp. 125.2

    What is the expected receipt in JPY?

    Why do they just calculate the expected futures rate of 125.8 and then calculate the receivable by 125,000 EUR x 640 contracts x 125.8 = JPY 10,064?

    I thought for that you need to 1) calculate the receivable at the current spot rate, which we do not know in this case, but could calculate 2) calculate the gain / loss of the futures deal, for which we would indeed need the calculated expected futures rate of 125.8

    But why is the receivable calculate by simply taking the 125.8? I am confused…

    Thanks, guys!

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