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Thought the exam was alright however ran out of time. Really don’t like the format of CBE, lost a lot of time clicking through everything, definitely would’ve preferred it as paper.
@aniam said:
In Q1 what did you write about behavioural factors of tech industry valuation? And for reasons which will drive the financing decision and impact in gearing (did you mention pecking order and all?)1. Patterns
2. Conservatism
3. Overconfidence
4. Narrow framing
5. Boost market reactionreasons which will drive the financing decision and impact in gearing
1. Cash. No influence on gearing if don’t use borrowing
2. Debt ( gearing increase, but have to think about credit spread and covenants
3. Equity. Dilution, gearing decrease. Potentially low rate for future borrowing
4. Mix. If stucture was optimul, company would like to save itAnd also couple words anour pecking theory, that usually companies choose….bla-bla
@xanpech said:
It will be great, if so….
Whole day thinking about numenr of the futures contracts! (((( so stoopid!!
The exam was OK. I find the requirement for some of the questions unclear.
The time was a big issue for me too as I need a little bit more time.
This was the last paper sitting in London. I am dreading the computer version as I see and heard a lot of negative feedback on the computerised versions of the exam.Yes the noise + Lack of Clocks on the wall. It was not helping at all. I kept on getting distracted by the sounds from the nearby halls
Can anyone tell me about the concept of margin that if we have a gain in mark to market so can we get that gain in the form cash or we can also increase our contracts from that gain if we choose not take the cash inexchange of the gain?
i can’t remember the mark allocated to this part. but the concept of margin is broker/commission house requesting dealer to deposit say $1350 per contract and say contract =10 hence, $13500 is deposited.
also, there maintenance account which dealers need to maintain say = initial margin. daily profit/loss is calculated on future and added to the account.
if loss is made say 15 ticks and tick value= $20 then maintenance account will be reduced by 10*$20*15 tick=$3000 (13500-3000=$10500 this is lower than required maintenance margin of $13500)
dealer will be requested to pay $3000 (maintenance variation) and if refused = default hence the account is closed.
i hope that helps.
@aadil1234 said:
Can anyone tell me about the concept of margin that if we have a gain in mark to market so can we get that gain in the form cash or we can also increase our contracts from that gain if we choose not take the cash inexchange of the gain?i can’t remember the mark allocated to this part. but the concept of margin is broker/commission house requesting dealer to deposit say $1350 per contract and say contract =10 hence, $13500 is deposited.
also, there maintenance account which dealers need to maintain say = initial margin. daily profit/loss is calculated on future and added to the account.
if loss is made say 15 ticks and tick value= $20 then maintenance account will be reduced by 10*$20*15 tick=$3000 (13500-3000=$10500 this is lower than required maintenance margin of $13500)
dealer will be requested to pay $3000 (maintenance variation) and if refused = default hence the account is closed.
i hope that helps.
I also couldn’t find the bid amount. I assumed they had sold Matravers tech at the P/E valuation. I then stated this was an estimate in the last section and said this would likely not be the final agreed value.
Your answers on theory prety close to me Capital structure-Cash off-Certainty and no dilution of control,i talked about rights issue-no dilution of control the on the 12 Marks i talked about the synergies-Financial,cost and operational then CAPM i squeezed in a number of points
For the ENPV question, I think it said that there was a 20 percent chance of cashflows or NPV only being 40 percent. I think I did 80 percent x npv + 20 percent x 40 percent x NPV. Though now I’m wondering if I should have multiplied by the cash flows rather than the NPV. Does anyone remember what they did?
1)I think cash flows would be reduced by 40% and not reduced to 40% was there.
2) So the future cash flows would be reduced by 40% I think. And if we reduce it by 40% it was giving negative NPV from my side.Was the question asking for calculating Margin requirements OR simply asking for loss or gain on the settlement dates? I think it was asking for loss or gain.
@reco I faced the same problem
@shobhit said:
Futures were giving the maximum benefit.I also found futures giving maximum then forward contract then options the weakest.
@xanpec what we’re ur margin requirements?
Mine was giving LOSS, LOSS and GAIN on the next three settlement dates.Since it was a receipt scenerio in which payment was being received in $ and the contract currency was local, so the strategy was buy now and buy later. I got a gain in next three settlement dates
@aadil.really
I think the Futures rate was falling on the next consecutive dates and risen up on the 4th March….. That’s why loss on Futures in the next two dates, and since rise up on the last date it occurs gain.
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