This is the third in the series of blogs to assist those sitting ACCA FM this Friday.
Risk Management is a topic that ACCA FM students will expect to see in the exam. More likely in Section B.
Forex Risk has a higher weighting in the syllabus. There are three key calculations to know:
1) Being able to deal with bid – offer spreads. Use the “RR” rule. It works every time.
2) Forward Contracts are simple.
3) MMH require students to cope with FX payments as well as receipts.
In addition, you need to know the key terms for Futures (Sell & Buy) and Options (Put & Call).
Don’t forget Interest Rate Risk. The two main topics are yield curve theories & the FRA hedge.