Forum Replies Created
- Posts
Sir,
can you please summarize if a company is going to deposit money in 4 months time for a period of 6 months with option exercise prices being 94.00,98.00 and 92.00 how will an interest rate option and forming a collar would be like.DEAR SIR,
Regarding the question neptune why the timing of tax on operating flows differs from tax savings on capital allowances.Shouldn’t it normally be the same.Please can you provide a brief illustration.DEAR SIR,
IN JUNE 2013 question 2 HAV CO. why the answer for part iii) cash and share exchange specifically does not include synergy benefits of 140m from acquisition. Moreover sir I did the following working and got just 17.6%
TOTAL EARNINGS AFTER TAX INC.SYNERGY BENEFITS=140 + (1980+397*.80)= 2041.6M
NEW SHARES IN COMBINED COMPANY=(1/2*1200)+2400=3000SHARES
THEREFORE EPS= 0.681
SHARE PRICE IN COMBINED COMPANY WITH P/E RATIO OF 14.5 OF COMBINED COMPANY= $9.87PER SHARE
ADDING IN CASH OFFER OF 1.33 GIVES TOTAL OF 11.20 PER SHARE
HENCE INCREASE IS (1*11.20/2*4.76)= 17.6%
Please point out the issues in the working.ThankyouDear sir in dec 2013 Kaplan mock they have done the following:
Forecasting Future Spot Rates based on PPPT:
The Swiss Subsidiary The US investment(SFr/£1
Spot 2.3140 – 2.3210)
Mid prices 2.3175SFr
The inflation rate in Switzerland is higher than the UK rate,
therefore the currency will depreciate against the pound.
Here they have simply taken the average of the buy and sell rate and slotted it into PPPT formulae to estimate the spot rates every year and used the rates to convert currency in original NPV calculationDEAR SIR,
in estimating spot rates in any NPV question whether we are to use mid market price and then apply it to PPP formulae or the one relevant to particular cashflow will be used as I have seen both of them have been used in some past question giving very different results at the end.DEAR SIR,
UNDER JUNE 2012 Q1 WHILE CALCULATING GAIN ON SHARES OF EACH COMPANY THROUGH SHARE FOR SHARE EXCHANGE COMBINED COMPANY EARNINGS WERE PAT OF BOTH COMPANIES PLUS SYNERGY BENEFITS.BUT UNDER A SIMILAR QUESTION IN DEC 2012 Q3 A DIFFERENT APPROACH INVOLVING EQUITY VALUES FOR EACH COMPANY PLUS SYNERGY BENEFITS WAS TAKEN.CAN BOTH THE METHODS BE RELEVANT BECAUSE UNDER Q1 OF JUNE 2012 EQUITY VALUES COULD ALSO HAVE BEEN CALCULATED WITH SHARE PRICE BEING AVAILABLE FOR EACH COMPANY AND VICE VERSA APPROACH TAKEN FOR Q3 OF DEC 2012DEAR SIR,
what other areas are likely to form part of written Q5.moreover I have read that money markets are removed from exchange risk mgmt. whether this is truedear sir,
what are the hot topics for written question in june 2013.For Islamic finance how indepth the topic is examinable.moreover sir in a question MARENGO involved d1 answer with a negative figure of -0.06 and yet examiner added 0.5 to the figure taken from distribution table.Is it not that d1 less than 1 the figure from distribution table to be deducted by 0.5.
dear sir,
while looking at examiner answers for black scholes option pricing, in calculation of d1 and d2 values examiner rounds the figure to 3 decimal places and then takes the weighted average of figures from distribution table to account for 3rd decimal place number.while your lectures suggests rounding of to 2 decimal places and taking the figure straight from distribution table for n(d1) and n(d2).is it appropriate still to do so or should the aim be to get as precise figure as possiblemoreover sir I do understand interest yield, curves ,bonds and coupon relationship theories but do struggle to get into grips with numbers on these issues. sir what important parts are essential to these areas and the best approach when doing such questions as there are no available lectures around them
ANYONE WITH P4 MOCK.MY EMAIL IS fun_tasy24@yahoo.com
DEAR SIR,
also could you please provide a brief understanding of the illustration of INTEREST RATE COLLAR in pilot paper 2013 under question ALECTO CO. as although i am reasonably ok with interest rate futures and options ,i have problem in coming up with collars.Also is there any other alternative to how examiner has illustrated the answer to collars as i found it extremely difficult to get around it after simple straightforward mechanism you have put forward for futures and options.
Although the written part is quite easy to come up with sensible points even involving collars (if the understanding of latter is under grasp)DEAR SIR,
i have a problem in pilot paper for 2013 exams as regards the question DORIC CO.PART c. i altough understood the majority of the question but am unable to reach the tax figure of $7.8m in latter part of the answer while calculating for value of new company.is it not the case that tax of 20% on profit after depreciation of $41.7m should be calculated as a figure of $8.34m (50-8.3) and why the ending figure is before interest.DEAR SIR,
I HAVE A DOUBT AS TO WHETHER FROM JUNE 2012 Q4 PART c CONCERNING VALUE AT RISK IS EXAMINABLE IN SIMILAR MANNER FROM 2013 AND TO WHAT EXTENT OVERALL WILL THE PORTFOLIO THEORY BE EXAMINED CONSIDERING THAT TWO ASSET PORTFOLIO FORMULAE IS REMOVED FROM FORMULAE SHEET.