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November 23, 2016 at 6:47 am
The researchers worked out CAPM by observing the below nature of financial assets:
“Most stocks go down when interest rates go up, but some go down a lot more”
Is it correct ?
Thanks for your comment 🙂
John Moffat says
November 23, 2016 at 6:58 am
Yes – that is certainly correct.
When interest rates go up share prices go down, and vice versa.
The whole basis of CAPM is that the more risky a share is, the more its share price will fluctuate.
August 19, 2016 at 4:44 pm
An inspirer and an engager, these are the three characteristics that best describe you sir! Thank you for being one of the few great teachers out there. May you inspire others to achieve the greatness you have.
August 20, 2016 at 6:07 am
Thank you very much for the comment 🙂
September 6, 2016 at 12:39 am
Thank you for the lecture.
Can the systematic risk be diversified by investing in many different economies ie in various countries?
September 6, 2016 at 5:55 am
Yes – potentially it can (although with globalisation different countries are tending to move in the same way, more and more).
It is a good point to make in the answer to a written question if you get the chance (but you would not be expected to deal with in calculation questions).
August 3, 2016 at 10:12 am
OpenTuition Zindabad(long live)! 🙂
August 3, 2016 at 3:36 pm
Thank you 🙂
July 30, 2016 at 9:16 pm
I have never seen a topic one used to consider mysterious rendered so powerless and elementary. Prof, the lecture is crytstal clear and the delivery excellent!
February 8, 2016 at 4:22 pm
watching ur lectures is like watching a classic david lean movie: the delivery and the message of the dialogue is, simply put, terrific!
April 23, 2015 at 8:34 am
Is it true that if the B=0.8 then it means that it’s 20% less Risky then the Market, So the Premium we want will be 20% less then the Market(i.e 8%) that’s why in Example No.2 we Subtract 20% then the Market Premium(i.e 8%)
Ex= 20% of 8 is 1.6
The Premium we want will be 6.4%
April 23, 2015 at 9:41 am
Yes – that is what I say in the lecture and what we arrive at using the formula 🙂
September 2, 2015 at 11:15 am
if beta= 2 it means that investemnt is 2 time more risky than the market value is it right ?
September 2, 2015 at 2:53 pm
It is two times as risky as the market i.e. the stock exchange as a whole.
March 30, 2015 at 4:54 am
Hi, May I know for chapter 20 Example 4 why must 1/0.13 not 0.13 at df@10% there ?
March 30, 2015 at 7:32 am
Firstly the required return is 6% + 1.4 x (11% – 6%) = 13%. (I don’t know where you have got 10% from).
Secondly, since we are discounting a perpetuity, the discount factor is 1/r. So in this case we multiply by 1/0.13
(If you are unsure about perpetuities then watch the earlier lecture on investment appraisal methods)
April 1, 2015 at 2:57 pm
April 1, 2015 at 2:58 pm
February 16, 2016 at 10:54 pm
I think he got the 10% from the answers to the examples in the notes where it states df @ 10%… PV @ 10%… Whilst it is clear that you have not used these, they confused me also. Can you confirm that this is an error? Many thanks,
February 17, 2016 at 7:00 am
Yes – it is just a typing error. I will have it corrected.
The workings are correct, and more importantly the lecture working through the example is correct.
December 5, 2013 at 10:15 pm
Thank you for the lecture..F9 here i come..im ready, thanks to open tuition
November 16, 2013 at 4:06 pm
I know you’ve shown us how to calculate Beta and you said that the examiner is not likely to ask us to calculate Beta but I was told by my workplace mentor that if beta is not given, then make a note to the examiner that I am assuming Beta is 1 and continue as such… Will this cost me any marks?
November 16, 2013 at 5:13 pm
You will either be given beta, or you will be asked to find beta by using the formula backwards (although this is not so likely).
You certainly will not be asked to calculate beta from other information – that is not in the syllabus for F9.
However – and this applies to all questions – if for any reason you cannot find a figure you need (probably because it is always harder in the exam with time pressure and panicking) then do invent a figure so you can still prove that you know what to do with it.
You will lose marks, but nowhere near as many marks as you would have lost if you just gave up on the question.
November 18, 2013 at 11:32 pm
May 7, 2013 at 3:14 pm
Thank you for helping, through your humble yet formidable teachings, a slow learner like me is seeing hope
May 1, 2013 at 10:23 pm
sir, although i am demanding a lot but i know you are generous enough to cope with it…ECONOMIC ENVIRONMENT is a tough theory, If you can assist us by throwing a lecture…PLEASE its a humble request….
April 22, 2013 at 11:27 pm
it’s always lovely listening to you sir, so you don’t have to feel guilty about your chat. and in fact it keeps me wide awake 😛
lots of sincere wishes for you, thanks a lot for your wonderful and generous services.
April 23, 2013 at 7:00 am
October 25, 2013 at 9:32 pm
I completely agree! – I was going to comment the same thing! Mr John always says sorry, I have to talk! I find it amusing when he discusses things, he removes my doubts and makes things clearer.
June 25, 2012 at 10:37 pm
It was a great class…thank you
keep up the good work
May 7, 2012 at 11:09 am
Thank you so much for these lecture, you have made it more simplier for me to understand. Thank you Open Tuition
April 10, 2012 at 2:57 pm
i find these series very helpful to my success in f9. i am sure any body can pass with it. now am studying p4, i have go over it another time to solidify my basis.
thanks to the entire team of opentuition
April 10, 2012 at 12:59 pm
Great, very well explained.. God bless u..
April 4, 2012 at 10:48 pm
This is beyond any human imagination, Indeed a revelation. You absolutely break the concepts like an Angel Joe. You are indeed a supernormal and exceptional blessing to us John. May the Almighty God add his abnormal blessings upon you- Great John.
March 21, 2012 at 4:41 am
there is no one i suppose more and mere better than you.. love the way you engaged us through out the lecture….. 🙂
December 7, 2011 at 2:43 pm
Saad Bin Aziz says
December 5, 2011 at 12:19 pm
CAPM is the most difficult f9 topic in the studytext for me…and now after viewing this lecture, its a piece of cake:-) thank you again john!
November 30, 2011 at 8:54 pm
awsum work done thanksyou for this work
November 29, 2011 at 10:28 pm
What can I say- Absolute classic!
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