12-28-2004, 10:33 PM
Hi,
As regards speculative business, it will be in ACCA paper 3.7 that ACCA students will come to know abou it. SImilarly its a norm to place Finance in the final modue of any professional exam (because of the assumed knowledge required for the subject), where we come to know about speculative business.
Speculative business is where we only trade based on speculative prices. Its usually characterised by future prices (based on market assumption), and without taking physical control of the asset. Generally derivatives, comodity futures etctera fall in this definition.
Example Mr A sees that market for rice is rising sharply. He books 500 maunds of rice at a future date of three months and pays for it today. The hope or estimated future price here is a speculation. Before the date actually comes he may sell his future purchase or even hold it till maturity and actually sell after delivery day. He will rarely take phisical possession but only buy and sell in books. He may also trade on margin if its a option tradable commodity. Such is an example of speculative business. It also includes taji-mandi transactions.
I hope you folks have got an idea.
Thanks
Aamer Sikandar
As regards speculative business, it will be in ACCA paper 3.7 that ACCA students will come to know abou it. SImilarly its a norm to place Finance in the final modue of any professional exam (because of the assumed knowledge required for the subject), where we come to know about speculative business.
Speculative business is where we only trade based on speculative prices. Its usually characterised by future prices (based on market assumption), and without taking physical control of the asset. Generally derivatives, comodity futures etctera fall in this definition.
Example Mr A sees that market for rice is rising sharply. He books 500 maunds of rice at a future date of three months and pays for it today. The hope or estimated future price here is a speculation. Before the date actually comes he may sell his future purchase or even hold it till maturity and actually sell after delivery day. He will rarely take phisical possession but only buy and sell in books. He may also trade on margin if its a option tradable commodity. Such is an example of speculative business. It also includes taji-mandi transactions.
I hope you folks have got an idea.
Thanks
Aamer Sikandar
