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The valuation of securities – The valuation of debt – ACCA Financial Management (FM)


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Reader Interactions

Comments

  1. ilham9089 says

    January 13, 2021 at 6:50 pm

    Sir, in example 12 why do we take into account the interest for the year 2007? Is interest always paid at the year end?

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  2. Nkanyi03 says

    July 27, 2020 at 7:25 pm

    Good day.
    will you please explain how do we got to 3.605 discounted amount in Example 10

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    • John Moffat says

      July 28, 2020 at 8:57 am

      It is the 5 year annuity factor at 12%, read from the tables provided in the exam.
      (Have you watched the earlier lectures on how to use the tables?)

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  3. Ahmadhassan0709 says

    June 14, 2020 at 12:16 pm

    Hi, Sir can you please explain why we haven’t calculated the total debt value in Example 08 & 09. Calculation showing the total value of Debt ? i.e for P total value is $ 625,000 (5,000*125)

    Is the answer is complete with giving value of Nominal $ 100 debt only ?

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    • John Moffat says

      June 14, 2020 at 4:26 pm

      Unless the question specifies different you can give the answer as the MV per unit or as the total capitalisation. (Section A and B questions will specify which)

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    • ninaaxtopol says

      June 18, 2020 at 9:42 pm

      Example 12, Convertible debt, I believe there is a calculation error, i.e 8 x 2.487=18.90, should be 19.896

      Nina

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      • John Moffat says

        June 19, 2020 at 10:21 am

        Yes – it is an error 馃檨

        I must re-record the lecture.

  4. draganel says

    November 29, 2019 at 7:59 am

    Hi, can you please tell there are some differences between Loan note and debenture?

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    • John Moffat says

      November 29, 2019 at 8:10 am

      They are the same – different names for the same thing 馃檪

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      • draganel says

        November 29, 2019 at 10:15 am

        ok thanks 馃檪

  5. zjanus says

    August 18, 2019 at 10:25 am

    Hi,
    I got quite confused that, in the question the debentures are redeemed at par(I think that is $100), but in the working it is calculated with the expected share value (which is $110.23).

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    • John Moffat says

      August 18, 2019 at 2:06 pm

      The question says that the debentures are convertible to 20 shares. Debenture holders will currently be expecting to convert because they are expecting the value of 20 shares to be more than par/nominal (which the question says is $100). So the MV of the debentures will be as per the lecture. (I assume that you have downloaded the free course notes?)

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      • zjanus says

        August 19, 2019 at 9:16 am

        Oh I think I understand now. Thank you, sir!

      • John Moffat says

        August 19, 2019 at 3:10 pm

        You are welcome 馃檪

  6. manishatai says

    November 24, 2018 at 6:17 pm

    Sorry john I got 19.90 for the interest 1-3 discounted at the present value is that correct? Thank you

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    • tabusheev says

      December 1, 2018 at 2:11 pm

      You right. It was small error.

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