• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

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

Risk management question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Risk management question

  • This topic has 10 replies, 3 voices, and was last updated 4 years ago by John Moffat.
Viewing 11 posts - 1 through 11 (of 11 total)
  • Author
    Posts
  • May 4, 2021 at 11:34 pm #619689
    manuel998
    Member
    • Topics: 4
    • Replies: 5
    • ☆

    Hi John,

    Having a look at how the examiner can add twists to the FX and interest rate q. I found fitzharris which had a slight twist from the norm but nothing unusual. Reading the comments for the March exam though seems like there was another twist with FX q but I can’t seem to wrap my head around how he could add a twist the closest similarity is to a q called buryecs but I was wondering if you had any thoughts? Thanks in advance

    May 5, 2021 at 8:09 am #619703
    my life
    Participant
    • Topics: 2
    • Replies: 36
    • ☆

    Hello Sir. Good morning. I would like to know the methodology(if any) of how to calculate spot cross rate? I saw it while solving a question in the Bpp kit. I didn’t see spot cross rate calculation anywhere else before apart from that question in the kit and to be honest I just try to remember how to calculate the.

    May 5, 2021 at 8:23 am #619708
    my life
    Participant
    • Topics: 2
    • Replies: 36
    • ☆

    My second concern has to do with the AFM exam that I sat back in March and to be more precise it’s about hedging using futures. If I remember well the date of transaction (so the date of expected receipt) was in May. However the closest date after the transaction date was 1 year later ( instead of the usual next 1 or 2 months after the transaction date as it’s often the case in the kit). So I was completely confused and I didn’t know how to calculate the unexpired basis. Why would the ACCA give 1 thing in the kit and another completely different thing in the exam? What’s their motive by the way? I don’t understand. Thank you Sir.

    May 5, 2021 at 8:29 am #619710
    my life
    Participant
    • Topics: 2
    • Replies: 36
    • ☆

    1 last thing Mr. John. I also find it difficult to reply to some of the topics you’ve posted on the platform. After getting access to a topic of interest on the platform there’s no section in which I can reply. I don’t know if it is locked. Any help Sir? Thank you.

    May 5, 2021 at 8:49 am #619717
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    For cross rates it is dangerous to simply try and learn a rule, and is safer to think through it logically.

    For example, suppose you are given two exchange rates as follow:

    $/GBP 1.80; and $/€ 2.5. And you are asked for the €/GBP exchange rate.

    We know that 1 GBP buys 1.80 dollars. We also know that 1€ buys 2.5 $’s.

    Therefore 1 $ = 1/2.5 = 0.4 €’s

    Therefore 1 GBP = 1.8 $’s = 1.8 x 0.4 = 0.72 €’s.

    So the €/GBP exchange rate is 0.72

    May 5, 2021 at 8:54 am #619718
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    I cannot really help you with regard to a question in the March exam without actually seeing the question (and the ACCA has not yet published questions from the March exam).
    I am wondering if you really did read the dates correctly, because although you would follow normal rules whatever the dates were, I cannot believe that the examiner would have you trade in futures expiring more than a year away because they do not exist in real life.

    May 5, 2021 at 8:56 am #619719
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    It is our normal policy that once a question has been answered and the student who answered the question has posted to say that they understand the answer, then the thread is then closed.

    It is because otherwise the thread goes on for ever – that in itself would not be a problem, but what is the problem is that then people start asking about completely different topics which then gets confusing for everyone 🙂

    May 5, 2021 at 9:25 am #619724
    my life
    Participant
    • Topics: 2
    • Replies: 36
    • ☆

    Oh ok. I may have misread the question. Thanks for spot cross answer. By the way I found the question I was talking about. It’s WASHI Sept 18. The way it’s done gets me a bit confused. Your illustration is quite simple compared to that question. How can I think through such a question logically for me to understand it easily? And also does the rate we use to calculate the spot cross rate of “0.70-0.74 ARD per JPY 1” matter in that question? Otherwise would I get no mark if I had done the opposite to calculate that spot cross rate? Thank you Sir.

    May 5, 2021 at 2:52 pm #619761
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You will find the calculation in the following previous post:
    https://opentuition.com/topic/cross-rates-washi-sep-2018-kaplan-exam-kit/

    If you calculated the the exchange rate against the ARD instead of against the JPY then you would still have got the marks 🙂

    May 5, 2021 at 8:19 pm #619789
    my life
    Participant
    • Topics: 2
    • Replies: 36
    • ☆

    Ok. Thank you Sir. I will follow your simple approach.

    May 6, 2021 at 7:11 am #619814
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 11 posts - 1 through 11 (of 11 total)
  • The topic ‘Risk management question’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • umangkumbhat on What is Assurance? – ACCA Audit and Assurance (AA)
  • ahmadhoney on How to register with ACCA?
  • John Moffat on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • osman-the-zephyr@ on MA Chapter 1 Questions Accounting for Management
  • adebusola on MA Chapter 1 Questions Accounting for Management

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in