[popscon]

I am almost done with Yaeger FAR review, actually this is my third reviewing..

However, I still do not fully understand the chapter where it deals with Derivative and Hedging…..

I am okay with MCQ Cindy assignes but I am worried because I feel like I don’t get it..

It requires Finace background which I don’t have since the only Fincance class I took was Fin301 which

does not cover many concepts that are discussed in the chapter..

Is this chapter important?

And there are MISC accounting like partnership, foreign currency transaction..

When you studied those chapter, did you guys spend as much time you put into other important chapters like Lease, Govermental accounting,..?

Give me some advices… as time comes closer I get more worried..

[jokami]

I hate those two topics as well and the worst part is that they are in BEC as well… My advice is: work A LOT of multiple choice problems… Do all the MC available for that topic for you to practice and sort of understand the concept while working with it… At least that worked for me and although I still have some difficulty with the topic I can solve it quit well.

B - 62, 70, 72, 79!!!
A - 68, 81
R - 70, 82
F - 84

"The limit to your abilities is where you place them" - Fortune Cookies

[jkey57]

Derivatives/Hedging isn't taught in Finance, it's taught in Int. Acct II.

It's very straightforward. Futures markets work the same way as option markets. I have a feeling, just a guess, that we will tested more on options.

Just think of it as price insurance (long put or short call) for an asset or future asset, or price insurance (long call or short put) for a cost that may rise (costing you more money in production) in the future.

Options:

Ex: A cattle owner buys puts/sells calls to hedge his risk of a decline in price

EX: Airlines buy calls/sells puts in crude oil to hedge their risk against higher fuel costs.

That's 98% of hedging, coming from someone who traded derivatives extensively.

[kmcg4k]

@jkey57 thanks for the tutorial. Derivatives and Hedging POPPED up in my WC in my last BEC and then in my Sims -Auditing. I had not been exposed to the topic at all with Becker in either of those sections Study guides. THEREFORE I just bought the Wiley test bank to cover all bases for my next 3 offensive attacks on FAR, BEC and REG (big sale). Now that I am in FAR, I see Becker covers it. I guess if you know Derivatives and Hedging you have prepared quite thoroughly! I'm going to nail it in FAR. Thanks Jeff for the sale on Wiley AND if i said too much just delete me….right?

REG 79 - LOST IT
BEC 74 74 73
AUD 71 79!!! LOST IT
FAR

[Anonymous]

In my experience, a lot of these problems deal with needing to either get or get rid of foreign currency. If you've got an MCQ on hedging and are lost, pick the answer that has you buying a call (if you have accounts payable in a foreign currency, you will need foreign currency) or buying a put (if you have accounts receivable in a foreign currency, you will get paid in foreign currency).

A/P — buy a call

A/R — buy a put

But selling a call or put is usually the wrong answer, because you're never that sophisticated a dealer in the problem set ups, you're a business trying to prevent something bad happening (A/P in a foreign currency, you want to hedge against the dollar depreciating/foreign currency appreciating. A/R in a foreign currency, you want to hedge against the dollar appreciating/foreign currency depreciating).

[jacquelynsimon]

I just learned something kind of neat. There is a Days until FAR Exam calculator on the side bar of my RogerCPAReview course website. I just entered my new goal date and poof it counts it down…. That’s motivation! Well at least I don’t have to calculate it myself. #lessstress

[jacquelynsimon]

FAR CPA Exam Derivative homework is HARD. Has anyone else had trouble with Derivatives? I mean conceptually I get it, but pen to paper and I get a little lost. I’m wondering if I should skip this chapter and come back to it? I think they put the challenging chapters in the middle #RogerCPAReview

[Author]

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