hi
why have we chosen the rate 0.7000 in converting cashflows from ard to jpy. why not 0.74000?
Ask the Tutor ACCA AFM
washi sept 2018
Sir?
They need to buy ARD for the investment and therefore to convert to JPY we divide by the lower rate (dividing by a higher rate would give a lower cost which cannot be the case!).
I explain how to decide which rate to use in the first of my free lectures on foreign exchange risk management.
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