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@smangasanga86936 жыл бұрын
You have just made the concepts of exchange rates very easy to understand from the lesson 1 video, thank you very much Sir.
@IFT-CFA6 жыл бұрын
Dear Smanga, Thankyou for your your kind words. IFT Support Team
@sportsupdate14134 жыл бұрын
5:45 your formula is different from the formula given by Curriculum F f/d = S f/d (1 + if) / (1 + id) so F b/p = S b/p (1 + ib) / (1 + ip) Instead of F p/b = Sp/b (1 + ip) / (1 + ib) correct me if I'm wrong. Thanks IFT!
@IFT-CFA4 жыл бұрын
there is no error. In the case of an indirect quote, the foreign country is taken as the price currency and the domestic country is taken as the base currency. IFT support team
@sportsupdate14134 жыл бұрын
@@IFT-CFA ok thanks! I got it
@omerfaruk453 жыл бұрын
@@IFT-CFA Then it must have been written as 0.87520. Because we simply counted the digits in the previous example. So there must be additional 0 at the end (although it has no power).
@omerfaruk453 жыл бұрын
15:04 You gave the correct answer as C. Does that mean that A is wrong, or A is also right but not the best interpretation? I am asking this because as far as I am concerned the minus sign forward rate means that the base currency depreciated as it will be able to buy less price currency.
@Aelderonify4 жыл бұрын
You're working is incongruent between the first and second slides. Second slide has 15 bips, whereas first slide refers to -26.5 pips
@IFT-CFA4 жыл бұрын
Second slide talks about another example. IFT Support Team
@rizarith993 жыл бұрын
for the very last example with 270-day LIBOR rates: I'm getting 0.84852 (you're showing 0.84862) for the forward rate when making that calculation - should it be 0.84852? ( credit to Ted Andersson in comment section) Therefore, the forward point should be -4 instead of -2.8. Hope IFT team will clarify on this. Thank you IFT Team.
@MrRobots1005 жыл бұрын
In the french company example is the GBP/EUR value is decreasing, shouldn't that mean the company can buy lesser amount of GBP with 1 euro ? If so, then why is the company selling GBP , shouldn't they be buying it ?
@IFT-CFA5 жыл бұрын
The French company is receiving payments in GBP. It would want to convert the GBP to its domestic currency, the EUR (it wants to sell GBP, buy EUR). Hence, if GBP is depreciating or EUR is appreciating, it would buy EUR and sell GBP. IFT support team
@backtobasicofficial84894 жыл бұрын
IFT sir I have the same doubt as Euro is getting weaker in foreign market that means gbp is appreciating then if the company will get gbp in future wouldn’t the company will be more profitable if it doesn’t do hedging
@999khare4 жыл бұрын
Because the company wants to hedge not speculate.
@monalinair51594 жыл бұрын
Sir, but in this example GBP is appreciating
@yemi85673 жыл бұрын
@@IFT-CFA But in the question, GBP is appreciating against the Euro.
@shresthtoshniwal93152 жыл бұрын
DOUBT: for 15:00, why wouldn't A be a better option for Q2 of example 6. Euro could be expected to depreciate for a variety of reasons that may not be part of the example (impending doom). Where maybe even the low interest rate may not be able to negate that effect. Ergo, A is a safer option (stays true in more situations than C)
@vidishsrivastava6525 жыл бұрын
In the last example, LIBOR rates are given for 270 days, so why are we multiplying the rates by 270/360? multiplying means that we are considering the rates for 360 days
@IFT-CFA5 жыл бұрын
If the forward contracts is for x days, make an adjustment based on x/360 convention unless told otherwise. forward rate is calculated as: IFT Support Team
@sruthihariprasad31485 жыл бұрын
So can we say: 1. To convert forward points to forward rate: FP/10,000÷SR X 100. 2. To find forward rate: SR - FP/10,0000. 3. To find forward points: FR - SR X10,000. ?
@IFT-CFA5 жыл бұрын
To convert forward points into a forward rate, divide the points by 10,000 if the exchange rate uses a four decimal place convention and by 100 if the exchange rate uses a two decimal place convention, and then add to the spot rate.FR = SR + (FP/10,000)FR-SR = FP /10,000FP = (FR - SR)*10,000 IFt support team
@sruthihariprasad31485 жыл бұрын
@@IFT-CFA thank you for the clarification!!
@tedandersson9413 жыл бұрын
for the very last example with 270-day LIBOR rates: I'm getting 0.84852 (you're showing 0.84862) for the forward rate when making that calculation - should it be 0.84852?
@rizarith993 жыл бұрын
I have the same answer as yours, then the forward point should be -4 instead of -2.8. Hope we will get IFT's team clarification on this.
@lukagagoshashvili53183 жыл бұрын
@15:42 shouldn’t the quoted 12 month forward rate be quoted as 4 decimals after the comma? which gives us the reason to multiply by 10 000 later
@Peterrrr8003 жыл бұрын
Thank you so much for helping people
@IFT-CFA3 жыл бұрын
Thanks for your kind words. IFT Support Team
@samrathpalsingh87306 жыл бұрын
Very insightful and crisp
@IFT-CFA6 жыл бұрын
Dear Samrath, Thank you for liking our material. IFT Support Team
@lukagagoshashvili53183 жыл бұрын
What is the EUR amount that french company receives in that case? ( assuming company receives 1000 GBP) is it 1000/0.87506= 1142.77?
@panachaiinthakul41724 жыл бұрын
At 5.20 why are you saying if we convert points to 4 decimal divided by 10,000 but divided by 100 for 2 decimal place ? Doesn't make sense to me. Thank you Sir
@IFT-CFA4 жыл бұрын
There is a mistake. We will multiply -0.15 by 100. IFT support team
@diantuen77325 жыл бұрын
this is amazing! thanks for the explanation. I love it :)
@IFT-CFA5 жыл бұрын
You are most welcome! IFT's objective is to help CFA candidates around the world. There is more material on our website: ift.world/ Please like our FB page (facebook.com/CFA.Trainer) and join Analystforum.com where I will be most grateful if you can show your status as “Studying with IFT”. Thank you! - Arif and the IFT Team
@6951670023 жыл бұрын
5:20, if decimal is -0.15, isnt basis point (-15*10,000)=-1500 and decimal(-0.15*100)= -15%
@joycec18835 жыл бұрын
you are amazing!
@IFT-CFA5 жыл бұрын
Thank you so much for your comments. IFT Support Team
@akshayseth24524 жыл бұрын
We have taken 360 days to de-annualise the interest rate but in one year there are 365 days then why not 365 and why 360?
@IFT-CFA4 жыл бұрын
If the forward contract is for x days, make an adjustment based on the x/360 convention unless told otherwise. IFT support team
@feng-juliang35494 жыл бұрын
13:48 forward rate is wrong?
@samees134 жыл бұрын
No I think we did the same mistake at first. You have to divide it by 10000 as pips. I.e -0.00014+.8752
@IFT-CFA4 жыл бұрын
No, there is no error.The French company would want to convert the GBP to its domestic currency, the EUR (it wants to sell GBP, buy EUR). The forward rate would be equal to: 0.8752 + (-1.4/10,000) = 0.87506.IFT support team