[prasanna03@25]

I agree the exam was a bit difficult and I ran short of time.
1) For the first question on hedging –
Currency hedging –
OTC Forwards – we had to calculate the forward rates from the spot rate and annual base rate given in the two countries
OTC options – Exercise price was given and premium payable was given.

Interest rate hedging
Futures
Calculate the effect on interest receivable if the interest rate increases or decreases by 0.5 %. (No of contracts and gain/loss on futures also had to calculate and mention)

Then it was answering some board queries.

2) The second question was about investment appraisal- both NPV and APV were to calculate. Surprisingly I was getting a negative value under both methods.
Then it had calculations related to the effect to gearing if the proposal is accepted and shareholders’ reaction to it.

3) Acquisition & Merger question – calculate the combined equity value after the acquisition. The benefits to the shareholder of one company, synergy benefits, and how the integration of the companies will be successful.

Overall it was a lengthy paper and for the section b questions, I found it difficult to answer all the parts clearly.

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