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FM Chapter 16 Questions – The valuation of securities – practical issues

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saintsinnersays

Hi john, please is the exam strictly theory or we still have some objective questions because recent past questions i downloaded are all theory with just two questions.

About 50% of the exam is always calculations and the other 50% is discussion.

There are three sections to the exam and you will have lots of examples of all types of questions in your Revision Kit. (I assume that you have a Revision Kit from one of the ACCA Approved Publishers. If not then it is essential that you buy one because question practice is vital to passing the exam.)

in the 3rd question , the answer is the earnings (60) divided by a dividend of (4). Sir my doubt is , how do we take a dividend cover that being a company capacity to pay dividend to its shareholders as 4 times , how can we claim them to be the dividend, as they arent the amount that is being paid , instead the number of times the co is able to pay yeah ??

Please explain question 3rd. I am unable to work with the ratios and even in chapter 13 of the notes, I am unable to understand how the ratios are workings.

Please help. Also, the concern is that I have got exemption in 4 papers which included the ratios chapters.

Hi, i have tried to understand the logic behind number 3 question chapter 16 but couldn’t do it. Would you explain this question and do the calculation for me please. And also it would have been more helpful if we could see the solution of these questions because most of them don’t have solution for it. Thanks

In the next few days, the workings for all of the tests will appear after you have attempted each question. So far the first 10 tests do this and I am currently working on the remaining test. As regard your particular question, the workings are as follows:

Thanks John, i have covered most of the lectures of yours but couldn’t find any topic related to Dividend yield or Dividend cover. May be i have missed some of the lectures because i have started revision for F9 already, so i would really appreciate it if you recommend me the lecture related to EPS, Dividend yield and Dividend Cover please. Thanks again, your lectures are really helpful.

saintsinner says

Hi john, please is the exam strictly theory or we still have some objective questions

because recent past questions i downloaded are all theory with just two questions.

saintsinner says

hi john, please is the exam strictly theory or we have have some objective questions

because recent past i have is all theory with just two questions.

John Moffat says

About 50% of the exam is always calculations and the other 50% is discussion.

There are three sections to the exam and you will have lots of examples of all types of questions in your Revision Kit. (I assume that you have a Revision Kit from one of the ACCA Approved Publishers. If not then it is essential that you buy one because question practice is vital to passing the exam.)

Ayowale says

For No 3,

P/E ratio x Dividend Cover =1/Dividend Yield

and

P/E = MPS/EPS

Therefore, all parameters are given, solve for MPS (Market Price per Share)

John Moffat says

OK, although I think it is rather faster to do it the way in the answer that is shown 🙂

Christoeliza says

in the 3rd question ,

the answer is the earnings (60) divided by a dividend of (4). Sir my doubt is , how do we take a dividend cover that being a company capacity to pay dividend to its shareholders as 4 times , how can we claim them to be the dividend, as they arent the amount that is being paid , instead the number of times the co is able to pay yeah ??

Pratibhapahwa4313 says

Dear sir,

Please explain question 3rd. I am unable to work with the ratios and even in chapter 13 of the notes, I am unable to understand how the ratios are workings.

Please help. Also, the concern is that I have got exemption in 4 papers which included the ratios chapters.

Kindly guide me on this.

Regards

Pratibha

John Moffat says

Dividend cover = earnings / dividend. Therefore the dividend is 60/4 = 15c

Dividend yield = dividend / market value. Therefore the market value = 15/10% = $1.50.

sushanth12 says

75percent

kashkhan88 says

Hi John, just to let you know i have found the lecture related to those topics i have mentioned. Thanks

John Moffat says

Great 🙂

kashkhan88 says

Hi, i have tried to understand the logic behind number 3 question chapter 16 but couldn’t do it. Would you explain this question and do the calculation for me please. And also it would have been more helpful if we could see the solution of these questions because most of them don’t have solution for it. Thanks

John Moffat says

In the next few days, the workings for all of the tests will appear after you have attempted each question. So far the first 10 tests do this and I am currently working on the remaining test.

As regard your particular question, the workings are as follows:

Using the measures from similar businesses:

Dividend = 60 / 4 = 15c

Market value = 15 / 10% = $1.50

kashkhan88 says

Thanks John, i have covered most of the lectures of yours but couldn’t find any topic related to Dividend yield or Dividend cover. May be i have missed some of the lectures because i have started revision for F9 already, so i would really appreciate it if you recommend me the lecture related to EPS, Dividend yield and Dividend Cover please. Thanks again, your lectures are really helpful.

John Moffat says

It is Chapter 13 of the free lecture notes, and the lectures that go with it 🙂