AFM*** ACCA Paper AFM March 2019 Exam was.. Instant Poll and comments ***

Disaster. I read the requirement first and smiling thinking i can do this. But when i read the story what the hell was this. Too many information, i dont know where to start, where to go. Even no 3 is confusing af. Seems like acca dont want me to pass this paper.

Planning on writing June.. Ya'll better have good news :(

Questions are sooo confusing!!! Why intentionally make it hard to even figure out what they're asking??

Omg yes I thought I could do Q1looked good until I started I even left 3 coz I thought one was good wasted too much time tgat my q3 was speed game

Acca please give us an extra 15 min it will stop the instant panic with your overly long questions

Tricky calculations that needed time to plan how to tackle them. Other question requirements were not clear. Too difficult compared to 2 previous exams sessions. Disaster!!! Will be back on June.

Anybody remembers the answers they got? I think Q1 the WA Cost of Equity was around 8.80%. Anybody else with the same answer?

how to calculate risk free rate in q1?

Absolute disaster, have not come accross any past questions like the question 1 and question 3 previously, and I have done all the exams questions available. Infact, I have not even come across tutorial notes like for question 1 (b). Will definitly be resitting this in June. Hope ACCA make the paper more realisticly passable and understandable then.

- Question 1 was lengthy but was confusing. I got 16% as my cost of equity, 6% as my cost of debt (assuming that Rf for only year 4 bond was to be considered, I ignored *the to be calculated as it wasn't needed). I got WACC equal to 9%. - Question 2 was confusing as it's my weakest topic in p4. - In question 3: I got 60% as a gain percentage for the acquirer. I'm not sure if it's right.

i got about 8.8 for Ke, hope its good and 0.85 for project specific beta

I rounded off my figures to 9%. Did you calculate the yield rates?

How did you calculate the asset beta of new construction project in Question 1 part b-2.

By calculating the asset beta of larger company and taking only 20% of it. Then calculating asset beta of the other company. At the end taking 50% of both and adding them to get overall asset beta.

I think the Asset beta was around 1.135. This is after calculating the yield rates and getting the PV of the bond using that 6% bond. Cost of equity was 8.8. I left the cost of Debt part. And in Q2 Forwards and Futures was close to 3.9% effective rate. Collars too were close to that I feel. Anybosy else?

Finally interest rate risk mgt but it would have been really wonderful if they gave for options too making that a whole 20 marks. Part b was quite okay partly but no idea about smoothing.. And part c.. Damn delta and gamma... Question 1 requirements looked very easy, apart from (c). But omg... Was it lengthy! And annual spot yield calcs were a mess.. Took so much time and ran way beyond 1.5 hrs... I really hope I've managed to score enough for whatever input for questions 1 and 2 because barely got time to write for question 3. Parts a and c were quite okay but didn't get time to write well for that... Time was up. :( December paper was so much better. I don't understand why they make the papers so lengthy. 15 mins of reading and planning converted into writing time doesn't really mean they should just keep on making the paper lengthy. And question 1 the estimates section, they could have allocated more marks maybe because of the amount of calculations? This was definitely a hard and lengthy paper.

Calculated asset beta for construction for V Co and for T Co, whichever the name was, asset beta for it and an average of both asset betas. First year annual spot yield 3%..? Cost of debt 3.75% and wacc 9%. Was 8.8 something %. And cost of equity was 8. Something % I think And question 2 collars were most beneficial. Anyone else? What was it for the section b for question 2 please?

@mahaw said: - Question 1 was lengthy but was confusing. I got 16% as my cost of equity, 6% as my cost of debt (assuming that Rf for only year 4 bond was to be considered, I ignored *the to be calculated as it wasn't needed). I got WACC equal to 9%. - Question 2 was confusing as it's my weakest topic in p4. - In question 3: I got 60% as a gain percentage for the acquirer. I'm not sure if it's right.

But you had to calculate Vd to be used in asset beta formula to calculate risk adjusted Be in order to use in CAPM for Ke, no? And to calculate Vd the annual spot yield was needed to calculate current mv of bond per $100?

In Q1-b. cost of debt was risk free rate from one year bond + 1.29% credit spread = 3+1.29 = 4.29%? Also was there net asset of target company in Q3 to calculate minimum acceptable bid?

What was the mark allocation for Q2 options? 16 mark? What about Q3 mark allocation? part b was 10 mark. not sure a and c parts Q1- a 8 mark, b-1 7 mark, b2 15 mark, b3 5 mark, b4 6 mark, 4 professional marks and part c 5 mark

Risk free Rate was the Spot Yield rate of year 1 which was 3% I think. Asset Beta weighted 0.85 MV Bond was around 105... cost of debt the IRR, roughly 5% pre tax. Cost of capital 9.2 % something WACC around 9% Hedging FRA 4.1 was best Futures 48 contracts

@tural199227 said: In Q1-b. cost of debt was risk free rate from one year bond + 1.29% credit spread = 3+1.29 = 4.29%? Also was there net asset of target company in Q3 to calculate minimum acceptable bid?

I did IRR calculation because it was redeemable .. Oh no... Was it 4.29?

Which fra did you use? 4-8? Or 4-9? I got confused over the fra rates and say I've worked questions with fra during revision time

4-8, since amount should be invested till 1 september

Okay thanks. I used that too but wasn't sure of it.

It was 4-8 FRA @ 4.10 on 36 million.

What were the calculations for the risk free rate in question 1? And what was going on in question 3.... I couldn’t figure out how to calculate the premium. Had a good go at everything else.

guys on Q1, I calculated asset beta using weighted average method - based on equity of 2 companies. I think asset beta at the end was equal to 0.53. Then I dont remember how I calculated risk adjusted Ke. I dont know it seems I used asset beta itself instead of equity beta on CAPM model. MV of equtiy of the company was $1800 m but I could not find MV of debt to regear. How did you calculated risk adjusted Ke?

Asset beta was 0.85 based on average I calculated. Ve was 1500 because of new share price after taking the project? I don't really know for this now.. And Vd I got $110 something for current value per $100 hence calculated cost of debt using IRR approach.. It was about 3.75%. Anyone else? And risk adjusted Ke by using the average asset beta to find equity beta and then use this in CAPM formula. If that is correct

@daniyalanjum1994 said: It was 4-8 FRA @ 4.10 on 36 million.

Yes that's correct. 4.1%.. Used that too