[iloveaccountancy]

Hi Sir, my apologies.

You do indeed explain this in the INTEREST RATE FRA lecture, where is applies.

I wrote the first post after watching the Currency FRA lecture, where the above does not apply.

[iloveaccountancy]

ok. I think I understand now. the ‘net’ effect, hence:

3. we multiply (number of contracts) x (contact size) x (lock-in rate) ?

is that correct?

[iloveaccountancy]

Hi Sir.

Thank you.

Honestly, I wrote these questions immediately after rewatching the lecture.

I don’t know if my attention is poor, but the FRA ‘v’ format was not mentioned (another format was), nor was any pay back of the difference in actual to the FRA.

I apologise if they were.

[iloveaccountancy]

Thank you.

[iloveaccountancy]

I’m so sorry Sir. I paused the lecture to ask this question because I thought you would go on to the next topic. But my question is answered in the lecture.

There is no delete button otherwise I would have deleted this post.

I will watch the whole lecture before asking any questions next time.

Thank you!

[iloveaccountancy]

I think I understand. Kd (return to investors)= the return required by investors.

but aren’t they buying this debt on the open market (not the company itself) anyway? so why would the company care what they want?

[iloveaccountancy]

Hi John.

that is really helpful. thank you for clarifying.

[iloveaccountancy]

Hi John.

Thank you for your response and help.

1. I accept what you say about the current examiner, but just to double check with you, this is what confused me in the first place:
https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p4/technical-articles/international-project-appraisal—part-2.html

(see specifically: Appendix 1 – NPV and Workings)

^it is a technical article from the ACCA AFM section. shall I assume that this is an old article and so what you stated now applies?

2. thank you for the link.

[iloveaccountancy]

Hi John

thank you for this very comprehensive answer. it is very helpful, i appreciate it.

(i did watch the lecture. the first table from the article reminded me of your workings in the lecture, it was the second table that threw me).

[iloveaccountancy]

Sorry John, in case my previous post was not acceptable.

here is the table (summarised) below:

Barrow Co & Greening Co

Barrow Co borrows: 3.6%
Greening Co borrows: EURIBOR + 0.8%

Swap

Greening Co receives: (EURIBOR)
Barrow Co pays: EURIBOR

Barrow Co receives: (2.9%)
Greening Co pays 2.9%

[iloveaccountancy]

I did not think to look at the contents page, I apologise.

Thank you, John.

[iloveaccountancy]

3. i know that reading the ACCA technical articles is always important. but do they always show up in the exam, in your experience?

[iloveaccountancy]

Your explanations are very clear and helpful. Thanks John.

[iloveaccountancy]

Thanks John. My apologies to Kaplan.

I did not know to include tax at that point when I tried that question. but actually putting in the ( x .80 ) does make things much clearer.

[iloveaccountancy]

ah yes I see what you mean. Thanks John.

it’s from the Kaplan kit, but the question is titled “Ennea (Jun 12)”, so apparently it’s from a past paper (June 2012), so may be in the BPP kit too. (I would not like to trouble you too much John, so if it would take too much effort to look it up that is ok I will just skip that question).

(the above calculation is only a part of the question workings. the rest made sense).

I have used BPP before they are much better in terms of clearer answers. This Kaplan book often skips explanations of steps, so I would not recommend it. The only reason I chose Kaplan this time is because they divide the questions by topic area.

[iloveaccountancy]

Thanks John.

I watched them but must have forgotten. May rewatch them.

By the way, both here and in the lectures you describe everything so clearly, but my revision kit (Kaplan) makes the same method look much more complicated/confusing than it actually is.

[iloveaccountancy]

wow, ok i see clearly now. then you move the 1+r to the other side of the equal sign so it becomes -1.

thank you John! that is a very clear explanation, i appreciate it.

[iloveaccountancy]

Hi Beata

i always plan for every question.

i put aside 15 minutes at that start for reading time and in that time i also plan by skimming the questions first and then the text for each question and making notes on the question paper- underlining main points in the text, circling things etc

i look at the marks for each question and multiply them by 1.8 to get the number of minutes I should devote to the question. then I reread the actual question itself THREE or even FOUR times to make sure i have understood EXACTLY what it does (and does not) want. I will underline the key words in the question.

Then I look at the number of marks again. e.g. 10 marks means 10 separate points. so I quickly think out and jot down 10 things (e.g. as bullet points in on the question paper), again referring specifically to the company in the scenario and referring each point back to the question (to double check relevancy).

if you become short of time, you can jot the bullet points down on the answer booklet too. that might get you some marks.

[iloveaccountancy]

to all of you who did not pass:

don’t feel bad. don’t lose confidence. remember you got some marks. you just need a few more to pass. you just need to figure out where you are falling short. concentrate on passing, not failing.

did you use the support materials on the ACCA website (technical articles). they are really good in terms of helping you pass.

e.g. did you read the questions properly? theres an ACCA article that lists question words and exactly what they mean (e.g. evaluate, assess, describe).

do you apply the answer to the specific company in the scenario (not just respond in general terms?).

[iloveaccountancy]

THANK YOU SO MUCH KEN!

[iloveaccountancy]

thank you John, that has really clarified the matter.

[iloveaccountancy]

thanks for explaining further, John.

I understand now- there is no need for further discounting in that instance.

(I did watch the lecture, and this question arose after watching it)

[iloveaccountancy]

thanks John, sorry for any confusion.

for 2, i meant if we have a profit for the first year and the questions says “the profit will stay the same but increase with x% inflation per year”, the first step would be to use the dividend growth formula. then how would we discount for the following years?

[iloveaccountancy]

that is extremely clear. thanks John.

[iloveaccountancy]

I see. thanks John.

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