Question 1

**Section B - Case 3: AeroFreight Logistics**

*Scenario:* AeroFreight Logistics operates drone deliveries across Europe and Asia. The company is based in the UK (GBP). It owes a supplier €500,000 payable in 6 months. 
Spot rate: €1.1500 - €1.1550 / £1
6-month forward rate: €1.1400 - €1.1460 / £1
UK 6-month borrowing rate: 4% (annual)
Euro 6-month deposit rate: 2% (annual)

**Question 5:** AeroFreight's operations are subject to various risks. According to portfolio theory, which TWO of the following represent systematic risk for AeroFreight?

Accepted Answer

Differentiate between systematic risk (market-wide, cannot be diversified away) and unsystematic risk (company-specific, can be diversified away).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing systematic risk with unsystematic risk.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FM — Financial Management Practice Exam 5

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