ACCA F9 June 2015 MCQ Questions Part 1

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1. alpirsbach says

   October 7, 2016 at 6:49 pm

   hallo sir
   i hope that you are healthy and doing well
   in question no 7 part 3rd
   if we are assuming debt beta zero dann we are actualy understating the financial risk while ungearing the equity beta
   i understand all of your explanation in lecture but at the how it will be a wrong statement
   i think according to your explanation it must be a correct statement
   i did not understand why 3rd statement is not correct
   plaese explan it a little more
   thanks

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   • John Moffat says

     October 8, 2016 at 1:56 am

     if we know the equity beta, then the more gearing there is the lower the asset beta will be.

     If the debt beta is greater than zero then the asset beta will be lower than when we assume the debt beta is zero – i.e. we will be removing more financial risk.
     By assuming it is zero we are not removing as much financial risk and therefore we are overstating the financial risk, not understating it.

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     • alpirsbach says

       October 8, 2016 at 4:34 pm

       wow
       thanks alot sir
       now i am confident about it

     • John Moffat says

       October 9, 2016 at 2:04 am

       You are welcome 🙂

2. DreamerSK says

   March 21, 2016 at 2:38 pm

   I will take number 5 as proof that even the best of us can get mixed up once in a while. This is also reason to never be too confident as well and to stay humble. Thank you for leaving the recording as is to prove that you are human 🙂

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   • John Moffat says

     March 21, 2016 at 4:06 pm

     I am certainly not perfect 🙂 🙂

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