This course will enable you to:
- Understand how foreign exchange risks arise, and how they can turn into profit or loss
- Familiarise yourself with financial contracts available for fixed exchanges of currency
- Appreciate the relationship between currency volatility and the price of options
- Advise on "over-the-counter" and "exchange-traded" modes of trading foreign exchange financial instruments for delivery in the future
- Discover different types of supplier of foreign exchange service along with some specialist new entrants
Many organisations have to deal in currencies different to their own base currency, whether this is through using foreign suppliers or accepting payment from customers overseas. Either way, this can introduce risks and complications. In order to advise your organisation and your clients, you need to understand the steps organisations can take to hedge against the risks and perhaps even reap some rewards.
This course offers a detailed insight into the world of foreign exchange. Get to grips with the risks to your organisation arising from foreign exchange and assess your options for minimising that risk. Learn about spot and forward transactions and why volatility between currencies plays a key role in determining the price of options. You'll also compare and contrast the two main modes of trading foreign exchange financial instruments for delivery in the future.
Foreign exchange risks
- How risk arises
- Purchases and sales in foreign currency
- Investments in foreign currency
- Disguised exposures
- Budget exchange rates
- Budgets and assumed rates
- Hedging transaction-based risk
- Hedging translation risk on investments
Economics of spot and forward
- How contracts are priced
- Spot transactions
- Forward contracts
- Deriving forward rates
- Applying the pips to the spot rate
- Future foreign exchange contracts
Economics of options
- Foreign exchange options
- Call and put options
- The risks of options
- Size of the option premium
- Options, forwards and you
Over-the-counter and exchange-traded
- Over-the-counter: Advantages and drawbacks
- Lifecycle of an OTC transaction
- Futures and options exchanges
- Exchange-traded instruments: Advantages and drawbacks
- Lifecycle of a exchange-traded transaction
- Buying and selling contracts
Types of provider
- Specialist payment firms
- Risks of working with specialists
- Types of client
- Commercial banks
- Financial market infrastructures
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- Was the learning activity relevant to your career?
- Can you explain how you will apply the learning in the workplace?
You select courses that meet these criteria, and as you complete each course you get a CPD certificate so you can provide ACCA with the evidence that you undertook the learning activity.