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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
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.
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.
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.
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
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.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 🙂
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.
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 🙂
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