- December 8, 2018 at 5:58 pm
As regards the foreign currency hedge, it definitely mentioned xxxUS/CHF 1. I checked this three times during the calculation.
For the APV question I think the approach was to calculate the net cash flows and discount them with the cost of equity using the ungeared beta (12%) resulting in a negative NPV. Then get the tax benefits p.a. and discount them with the tax free rate (4%) and add them to the NPV which then, became positive.December 8, 2018 at 9:02 pm
What did you guys write for the reasons to change from conglomerate to new portfolio structure?
I spoke about the needs of the shareholders and risk diversification. It moved from a small set of shareholders who invested all their wealth in the company to diverse individual and institutional investors who would be well diversified so they don’t need a single company who is into many different businesses. I hope I nailed that sighDecember 8, 2018 at 9:21 pm
I spoke about the needs of the shareholders and risk diversification. It moved from a small set of shareholders who invested all their wealth in the company to diverse individual and institutional investors who would be well diversified so they don’t need a single company who is into many different businesses. I hope I nailed that sigh
Yeah that was my rationale essentially. Since the new shareholders are already diversified (unsystematic risk essentially all reduced by their diverse holding), the company diversifying adds no benefit to them and instead adds cost over benefit
I’m glad we agreeDecember 8, 2018 at 11:39 pm
Hey Everyone !
A very interesting thread about AFM exam Dec 2018. Seeing polls and discussion, the paper was setup in fair manner to not only test our understanding of the subject but also time managment skills.
Like many, I unproportionally gave Q1 about 2 hours which I believe was excessive. However the most suprising bit was Question 2 which was a googly from examiner given Currency hedging was tested in last attempt with an almost identical question. Thanks to my past paper revision I was able to pick that one. Question 3 I believe was the easiest, given you have looked up the past papers.
The most challenging part for me was Q1 part c second and third requirement. I went blanked with share to share and mixed option calculations.
Anyway I managed to atleast complete my exam and felt satisfied with overall experience.
Following are my key takeaways from the exam:
– Cover majority or all topics in study text.
– Past papers are key to success.
– Develop an understanding of each topic.
– Dont forget techincal articles.
– Stay focused and keep a close eye on clock during exam as time managment is also important.
I dearly wish that all of the students who had studied hard shall pass the exam.
All the best,
F.December 10, 2018 at 5:43 am
IDecember 10, 2018 at 5:57 am
In Question 2 during Calculation i divide rate in all three steps forward future and option
please help me how many number deductDecember 10, 2018 at 5:59 am
In question 2 in all three step forward future and option i divide how many number deduct please help meDecember 10, 2018 at 9:03 am
By the way, can anyone define what portfolio restructuring is?December 10, 2018 at 10:59 am
In question 2 in all three step forward future and option i divide how many number deduct please help me
You were supposed to multiply as the transaction was CHF and the rate was 1 CHF : 1.03 USD so therefore you multiply.
Don’t worry about it though, if you did all the following steps right, even with incorrect figures, you’ll probably only lose about 2 marks. We only need 50% of the marks 🙂December 12, 2018 at 2:17 pm
I have it negative..
I managed to over complicate everything. Hopefully this will not turn into a disaster.December 14, 2018 at 7:26 am
Hi everyone, AFM questions are already published, anyone knows when will be answers published ?January 8, 2019 at 8:21 pm
How’s everyone feeling
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