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Dear Mr. John Moffat,
I’m wondering regarding the received amount of EURO 80 million.
As I understood by your good self, when receiving an amount in foreign currency I have to choose the following strategies
Buy call option
Buy now futures and sell futures later
Money Market Hedging develop FC liability then LC assetThe amount of EURO 80 million has been treated as payment?
Can you please advise?
Thanks.
AmaniThey are receiving €80M and therefore they need to sell €’s and buy Yen.
Since the options are denominated in €’s they need an option to sell €’s which is a put option.
Similarly, since the futures are demoninated in €’s they needs to sell futures (and buy back later).
Money market hedging is not available in this question because we are not given the interest rates in the two countries.
Thank you very much for your response.
Mr. John, Is it enough to practice the last 14 past papers for AFM or shall I consider a revision kit with them?
Please advise?
It would be best to buy a Revision Kit from one of the approved publishers.
The reason is that both the examiner and the syllabus have changed over the last 14 years and so not all past questions are relevant.
A Revision Kit includes all relevant past exam questions together with additional ones that are good for practice.
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