June 2025 ACCA Exams

How was your exam? Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Result of hedge using lock in rates

This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
June 5, 2023 at 10:07 pm #686114
simranxdeep
Participant
- Topics: 39
- Replies: 60
In Nutourne, the examiner solves the sum by
(Lock in rate * Number of Contracts * Contract Size) + Amount converted on Fwd contract
I did it by Lock In Rate * Contract Amount (amt to be recieved)
Is my way correct? Or should I follow the examiner’s way of solving?
June 6, 2023 at 6:51 am #686143
John Moffat
Keymaster
- Topics: 57
- Replies: 54684
The examiners answer does use the lock-in rate in his second alternative workings (he calls it the predicted futures rate which is strictly speaking the wrong wording).
The forward contract only applies to the amount not hedged by the futures contract.
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.