[vars]

Dear Sir

Below has appeared on the ACCA forums for Paper P5. I am also confused as I have checked both the textbook and OT notes and found nothing of this sort.

I feel quite desperate with the examiner- it seems he is asking questions out of the syllabus.

Anyway, thank you for your reply.

Cheers
Vars

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yinka228

Participant

Q1. Evaluate performance report n choice of metrics.
1 b what gets measured gets done. discuss in relation to scenario
1c. The risk n uncertainty using the criteria n select the appropriate measure
1d. brand n image.

q2. budgeting. rolling vs incremental. n computation of change in buffeted income

q3. bcg analysis

q4. predicting corporate failure. calculation of gscore n evaluation of the score
4b evaluate quantitative analysis
4c evaluate causes of corporate failure

[vars]

Sir,

I have passed P4 also. Thanks a lot for your invaluable help!!

[vars]

Phew!! Thanks a lot. You really are a great tutor. I have attended tuition with a gold approved provider. I can and am testifying that it is the open tuition lectures that helped me grasp and understand P4!!

[vars]

Apologies for being adamant but I want to get it right. Also, please rest assured that I have gone through all your lectures including the recent ones such as the lock in rates.

I have the following answer when working the questions:

Buy 118 call options contracts at 1.36.
Total premium at today’s spot is Eur 303,275 (pay)

It is the calculation for net payments/receipts that I am stuck because the example at open tuition gives the spot on the date of the transaction.

Grateful if you could, plese, confirm if the below is ok:

Assume that the option is exercised. The worse outcome will be:
Calculation for net receipt:
Transaction:
$20M/1.36(exercise price) =14,705,882 (rec)

Less premium paid today = (303,275) (pay)
Net receipt =14,402,607 (rec)

[vars]

Sir, thank you for your prompt reply. I really appreciate.

However, I am still not clear about the following:

1) How to determine the worst outcome? Should we stop at the premium calculation? Could you please illustrate with Casaphobia exam question?

2) Can we assume that the lock in rate is the spot rate on the date of transaction?

3) Or can we take the forward rate as the spot rate on the date of transaction? But what if forward rate is also not given in the question?

I think if you could please illustrate with the exam question, things will be clearer in my mind.

Thanking you in advance.

[Author]

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