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Cap 2 SFMA Assessment Study Group
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autumnbelle wrote: »I still haven't done a full paper with out looking at solution. I'm the same little miss ðŸ˜႒ tax is full on ct loss relief is very confusing. Still loads to do for it too. Can any one tell me how u know whether to buy or sell fra and options at the beginning?
You don't buy or sell FRA's or options per se. They are over-the-counter agreements (although you can get exchange traded options) so you have to look at it as more of a contract negotiated between two parties for a set rate at a set time. You enter into the agreement based on what your expectations of the future interest rate and what you are trying to hedge against. E.g. you are borrowing and are worried the interest rate will increase from 8% to 10%. You negotiate an FRA (rather than buy/sell) with the bank agree say, 8% in 3 months time, there is no buying or selling. If the interest rate does indeed increase you will be protected and thus gain and the bank will lose and have to payout. You have obviously negotiated the contract in your favour to hedge against your own perceived risk. Does that help
The 'decision' lies with whether to enter the contract or not. If you plan on borrowing and expect interest rates to rise, then enter an agreement to protect against extra cost. If you plan on depositing and expect interest rates to fall, then enter an agreement to protect against loss of interest.PhilipLuke wrote: »One or two parts I did yes. The hedging questions I always use the notes for backup!! But I try not to as there isnt time
Ya my hedging notes are definitely going at the front of the folder...so confusing! I definitely need to start practising, still relying too much on the notes.0 -
Thank you so much I have no organisation at all in my sfma folderlittlemiss123 wrote: »You don't buy or sell FRA's or options per se. They are over-the-counter agreements (although you can get exchange traded options) so you have to look at it as more of a contract negotiated between two parties for a set rate at a set time. You enter into the agreement based on what your expectations of the future interest rate and what you are trying to hedge against. E.g. you are borrowing and are worried the interest rate will increase from 8% to 10%. You negotiate an FRA (rather than buy/sell) with the bank agree say, 8% in 3 months time, there is no buying or selling. If the interest rate does indeed increase you will be protected and thus gain and the bank will lose and have to payout. You have obviously negotiated the contract in your favour to hedge against your own perceived risk. Does that help
The 'decision' lies with whether to enter the contract or not. If you plan on borrowing and expect interest rates to rise, then enter an agreement to protect against extra cost. If you plan on depositing and expect interest rates to fall, then enter an agreement to protect against loss of interest.
Ya my hedging notes are definitely going at the front of the folder...so confusing! I definitely need to start practising, still relying too much on the notes. ah i keep telling myself il get there 0 -
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Do u know why OSC is 200 and not 600?
I never even noticed but il check in the morn I'm so confused with that one and rose I don't think I will have time for q 1s full day today and just got have way through Margaret's and that's using solutions I'm honestly startin to think I'm slowest studier in the world 0 -
autumnbelle wrote: »I never even noticed but il check in the morn I'm so confused with that one and rose I don't think I will have time for q 1s full day today and just got have way through Margaret's and that's using solutions I'm honestly startin to think I'm slowest studier in the world
That's what it is...just a typo I'd say. OSC should be 600 and the RE should only be 1200. At least you spotted it
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me too, questions take sooo long! and some of Margaret's don't even have many adjustments. just when you think your getting consol, you come across a question that just throws you off completely, i haven't been able to do one without looking at the solution either. Im dreading trying to do an fx consol!!
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I think hers are more at level they will be in the exam, we sound to be in the same boatme too, questions take sooo long! and some of Margaret's don't even have many adjustments. just when you think your getting consol, you come across a question that just throws you off completely, i haven't been able to do one without looking at the solution either. Im dreading trying to do an fx consol!!
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