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@girlfriday good tips! I also especially find it very useful to write down the time allocation up front before answering each question, highlighting and writing the requirement questions in the margin. And writing down keywords during the reading time so I didn’t forget points while writing out the answers I had thought of during reading. Also didn’t look at any of the optionals until I finished q1.
@nav1980 LOL brilliant real-life application there! Which other optional did ou attempt?
I used expected values as well. Since it said decision under risk, not decision under uncertainty. Did not do maximax minimax.
Lol I think I got 12000 but I had a feeling I calculated it wrong so hopefully that was only one mark.
For the swot bit it was to look at the swot and suggest improvements to metrics based on what was in there. for example the new product opportunities in the swot should be reflected the metrics to address the innovation bit of the company’s objectives.
for the bit on break even there was a comment in the appendix relating to response 1 asking to calculate the number of units required to cover the additional costs. Just did a quick calculation of additional cost over contribution.
I though it was a very fair paper. Definitely not easy, but it was the right level of tough – challenging but not ridiculously difficult. The questions were also clear (except maybe Q2c but I wasn’t sure how to link non financial internal / external to the alliance) and there was no info overload (ha ha). It was time challenging but you could definitely finish it on time if you paced yourself – which I did, and managed to finish right on the dot, except maybe would have liked to elaborate more on my last sentence but ah well!
Self studied this paper as I’m working, and enjoyed the syllabus, am hoping for a pass as its my last paper.
I did p4 last December and can see a huge difference between the quality of exam paper set. Both syllabus were interesting but the p4 exams tend to be a mess of info overload and ridiculous time pressure. Huge contrast to this which was reasonable.
^ exactly, don’t despair. I took this ridiculous exam in December 2014 and attempted only 75% of the question with half of each of the 2 optional questions attempted. Was sure I was going to fail and I was so upset because I actually liked and understood P4 overall, just didn’t have time to apply knowledge in the December sitting. Somehow I passed with 64%. And this, despite being sure I made tons of calculation mistakes in Q1 – for goodness sakes, I made up a standard deviation figure! As long as your written responses are solid and justify your calculations appropriately, you have a chance, and you do have a chance (like me) even attempting only 75% of the paper.
Good luck!
@pedroorange said:
Anyone know if we will be able to get model answer or a tutor’s attempt at the paper from anywhere? This is my last paper and I’m desperate to gauge how well I’ve done!My attempt was a bit of a scatter gun approach, and because Q1 took so long the written stuff in 2 and 3 tended to be quite brief and included some guesses. Also have no idea how you’re supposed to get the 4 marks for a report, would take twice as long to have calculations in a separate appendix and keep switching back and forth between the two. Hoping I’ve done enough
1) a) is diversification and buying undervalued companies a valid risk diversification strategy? – entering new markets is a good way to further diversify risk as market risk will be diversified. companies will be undervalued when management is not performing well. however in perfect markets the company will not be undervalued. companies more likely to be undervalued in imperfect markets, but this makes these investments more risky. so yes it is a valid strategy although you can diversify risk but your overall risk exposure may actually increase. Basically I waffled a lot on this and not sure how much was correct!
b) why might EU not want Nahara to buy the other co? – competition commission, cons of a monopoly, foreign govt owned so political risk as well
c) i)value of Fugae – g=br, FCFE @ ke, add synergy, time by 7.5, subtract consideration (mvE + mvD). Think I worked out the value of Fugae to be 922.5m
ii) value of luxury transport project with and without option – probabilities (pretty sure I got these right but didn’t include any workings) ,expected value discounted @ WACC (I used Avem’s WACC in error but noted this later on when I realised), black scholes option (just did Pe-Pa to show there was intrinsic value), asset beta of luxury business weighted to .15 and regeared
iii) evaluate i) and ii) – Avem should buy F, should proceed with luxury transport project as positive NPV, should take option as has intrinsic value (assuming £50m paid today)
2 a) centralised treasury – inter company hedging, greater power in the finance market (eg borrowing), can use treasury to achieve group’s targets
decentralised – motivate local staff, can react quicker to local issues, should know local regulations better (eg Islamic finance), autonomy
b) Calculate swap & option – swap seemed fairly easy, didn’t attempt the option due to time
c) Salam – spec not allowed, not allowed for cash, gold, silver etc, must be backed by existing tangible assets, no unethical trades like gambling, must be compliant with sharia law so more expensive to set up3a) EU Free Trade Zone characteristics and goals – remove barriers to trade eg import tariffs and embargoes, all members treated equally rule to reduce political conflicts impacting trade, competition is better for customers and shareholders eg through lower prices
b) IRR, MIRR, VAR at 95% and 90% – did all calculations, D was better in 3 of them so go for D especially as MIRR is superior to IRR
c) what are the legal costs and how to mitigate – food standards agency regulations/fines, mitigate by Joint Venture, making provisions, pay legal consultants with expertise in that marketReading what you wrote is so so similar to what I did in exam.
Ci)Did the whole of q1. Same value for fugue, I got 922.5.
Ciii) I recall the question saying something like if avem buys fugue after the project starts they forgo the synergy benefits, so when I compared ci and Cii) I somehow got higher value for ci and recommended it proceed with the acquisition before proceeding with project so it doesn’t forgo synergy benefits. Not sure tho.
Overall thought I reaonably completed q1. But it took me 2 hours. 30 mins each for q2 and q3. Q2 I didn’t complete the option calculation and the ultimate recommendation but did the rest (swap, theory etc) and q3 did everything except explain var and don’t think I did the var calculations properly.Paper would have been doable with more time. Or less time pressure. That’s the sole problem I had. No time to think, what’s the point…
If you attempt 75-80% of the paper is there any chance of passing?
I finished q1, did the theory for q2 and 3, but couldn’t finish the calculations part of q2 and q3. left out the options calculation for q2 but managed to calculate the swaps part (couldn’t form a conclusion), and for q3 calculation worked everything up to var but left out the discursive bit on Var. guessing I left out up to maybe 10 marks in q2 and up to 10 marks in q3 there.
@hale said:
Was it correct? As I remember 50% that the return would be 40%. If it’s the high case, then 20% that return in Y2-4 would be 40%. Anyone please confirm and tell me how you did it?Can’t say if it was correct. But I took 75%*80% for probability of the first scenario as that would be the probability of both normal growth in the first year (100-25%) AND (multiply) normal growth in the second year (100-20%)…
Made up a standard deviation figure for input in the option pricing model. No time to think!!!
What a paper….
I haven’t felt this bad about an exam in ages and I actually like/understand the syllabus! =(
It was 90…
Agreed q3 was easy and q2 was doable but spent so much time in q1 that I did half of q2 and half of Q3. Seems the examiner is not trying to test understanding of the actual, but how fast you write. For those who actually know how to do the questions and can answer it correctly if it wasn’t so rushed, lose out compared to those who just ‘wing it’ to get half correct answers. What’s the rationale behind this and what is Acca or the examiner trying to do? So so ridiculous.
For q1 I calculated the probability of each scenario (scenario 1, 60%, scenario 2 25% and scenario 3 15%) and took a weighted average of npv.
Yes I calculated a real put option value. What was the conclusion in part c 3? Was the acquisition beneficial?