AFMACCA Paper AFM September 2020 Exam was.. Instant Poll and comments

it was a rs202m receipt. A payment for goods sold

Did we all get the same paper? Question one?

Hi all, I am thinking to sit the AFM paper in December this year. This would be a re-take as the last time I sat AFM was last year December 2019 paper exam and failed with 43. Please may I ask for your experience with the calculations on WACC, futures, forward contracts and money market from the CBE exam. Does it take longer (of fiddly) to do the calculations on their computer spreadsheet compared to the previous paper exam? I am concerned I might be spending most of my time creating tables and making the formula work on their spreadsheet system. Any answers on my question will be greatly appreciated. Thank you for your time and I hope you passed the AFM exam.

My exam was a bit different to many above. Question 1: Two theory questions on unbundling vs a demerger basically. Both fine for me. Fcff. I though was fine. Calculate the synergy use PE ratio. Was a bit confusing but think was ok. Had a 10 marker on calculating the % changes for three different payment methods. I was a bit lost on this. Would be surprised if I got more than 2 marks here. Commentary on the acquisition. Just made as many points as I could. Question 2: Npv, mirr, var and duration. Though it was very easy which made me think I may have missed something here. Got an NPV of like USD 20 million. Question 3: Hedging of currency using forwards, futures and options. Was a bit confused and tired at this stage. What did people do? I sold futures and bought put options. No idea what the difference between a currency swap and an fx swap. Wrote some waffle but I'd be surprised if I picked up any marks tbh.

First Time taking CBE. My version of the exam had 1) unbundling and acquisition of a company in the same industry. 2) forex hedging using forwards, futures and options 3) NPV, MIRR,VAR & duration. I have to say I found the excel spreadsheet extremely slow and slowed down my entire exam with cells not copying and numbers not showing up.

Q1: Unbundling and synergy benefits were pretty straight forward. Even completed proposal 1 and 2. Was satisfied the way my calculations were. But then I saw I was lagging behind. So took the tough choice of not solving proposal 3. Proceeded with preparing the report and the discursive part which I feel was not satisfsctory by missing critical points. Couldn't return back to complete proposal 3. Q2: I had promised myself before exams that I would attempt hedging related questions at last, but considering the novelty of Q3 at glance, I ended up breaking my promise and did Q2 before Q3. Wasted a lot of time working and reworking between call and put and buy and sell. Ultimately settled for sell futures and buy put option. It didn't seem to be right considering the wayward outcomes that I got. Took the short cut approach for futures using lock-in rates at (sept futures price + unexpired basis). For Options went for put option and ended up considering some fictitious spot rate of R71/$ as I was running out of time. Forex swap and currency swap I could vaguely remember involves swapping the future cash flow at today's spot rate. I couldn't build up on my answer as I was not sure and didn't have time to apply my mind. Overall it was a miserable performance. Q3: When I started reading this question in detail I cursed myself for not keeping up my pre exam promise of attempting hedging related questions at last. This was really an easy one with calculation of VAR, NPV and MIRR for project 3. Rest were already there in the question with some minor tweaking here and there. Life was made easy by CBE spreadsheet as I could calculate MIRR by plugging in the spreadsheet formula. Sad part I couldn't properly explain the figures that I computed. Overall it was an easy paper if one had solved past years' questions. If I fail then I won't be able to blame my luck as I couldn't have asked for an easier paper

Q1: Unbundling and synergy benefits were pretty straight forward. Even completed proposal 1 and 2. Was satisfied the way my calculations were. But then I saw I was lagging behind. So took the tough choice of not solving proposal 3. Proceeded with preparing the report and the discursive part which I felt was not satisfsctory as I missed critical points. Couldn’t return back to complete proposal 3. Q2: I had promised myself before exams that I would attempt hedging related questions at last, but considering the novelty of Q3 at glance, I ended up breaking my promise and did Q2 before Q3. Wasted a lot of time working and reworking between call and put and buy and sell. Ultimately settled for sell futures and buy put option. It didn’t seem to be right considering the wayward outcomes that I got. Took the short cut approach for futures using lock-in rates at (sept futures price + unexpired basis). For Options went for put option and ended up considering some fictitious spot rate of R71/$ as I was running out of time. Forex swap and currency swap I could vaguely remember involves swapping the future cash flow at today’s spot rate. I couldn’t build up on my answer as I was not sure and didn’t have time to apply my mind. Overall it was a miserable performance. Q3: When I started reading this question in detail I cursed myself for not keeping up my pre exam promise of attempting hedging related questions at last. This was really an easy one with calculation of VAR, NPV and MIRR for project 3. NPV was $20m with 9% discount factor. Rest were already there in the question with some minor tweaking here and there. Life was made easy by CBE spreadsheet as I could calculate MIRR by plugging in the spreadsheet formula. Sad part I couldn’t properly explain the figures that I computed. Overall it was an easy paper if one had solved past years’ questions. If I fail then I won’t be able to blame my luck as I couldn’t have asked for an easier paper

Shouldnt it Be a call Option????? It was a receipt - Contract was in R - Fx/Home so it is a buy option ryt??? we receive the rupees, we sell the rupess and buy the $

You are selling contract currency, contract currency is R, therefore put option

Got - 3.3 so at least very close lol

Ok i can resit thé exam ! I got that wrong So i missed 50 points... Its So hard i will probably do another exam instead of afm...

Hi Mikey200. From my experience of doing the CBE for the first time, I thought the excel would be great and let me speed through the calculations. However the CBE practice test on the ACCA website is way faster than the excel spreadsheet in the exams. I found today's exam frustrating when trying to use the excel tool. It was extremely slow, the functions weren't working. For example, I couldn't copy the results of my 4 year cash flow into a new cell and the numbers showed up as zero. In the end I had to manually enter them but that leaves room for error..... I felt like it made my workings look more messy as I ended up just using my calculator and it was so slow to even type in the cells that I didnt bother as I was under pressure with time. However based on my location the CBE is more practical rather than an exam center so I would probably choose to do a CBE again but be more prepared for the excel. I did sent a note to ACCA with my feedback as I feel the tool on their website is way better and the tool on the exam day is more like the excel sheets on your google docs in terms of speed. Hope this doesn't deter you too much and is helpful :)

Q1. There was something to do with "crown jewels" re selling off gardening business to make the company less attractive for takeovers and also some form of "golden parachutes" ie significantly enhancing their remuneration in case of a takeover bid. There were 7 marks for discussing the effectiveness of the 2 methods in avoiding a takeover bid. Another part, being not part of the report,was to discuss the approach re remuneration and employees treatment, i think. Q2. I think you missed the part of the question re methods of bypassing the repatriation of foreign dividends as there was a possibility that this could happen if the regime was going to change. Q3 you missed the part asking "compare and contrast currency and FOREX swap"

I was highly disappointed today. They wasted all the hours I've put into studying. My exam didn't launch after going through the check-in process way ahead of time. Contingency systems on the OnVue platform didn't help me well. Only to cancel and ask me to complete a form for reschedule. Too bad!!

I did the same mistake but they say you get penalised only once, so marks for calculating the wacc will be awarded even if the bond value is wrong.so around 1 mark here will be lost. I did the same mistake when calculating the MV in part b, so here another mark is gone! That's why after exam it's very healthy to relax and forget about it before you realise that everything you did is wrong. They know that the exam is heavy and they will always put new elements to surprise us, just as they did in Q2 re land and buildings tax aspect, i think it was the first time to be tested in AFM paper. So there is more to come, i just hope this was my last time to take this exam.this is the most technically demanding of the entire syllabus, so let's be proud, at least we're trying!

I feel the exam was a disaster. The technical issue that I faced totally obstructed the flow of my answer and as result I lost so much valuable time and also messed up the 50 Mark question. The paper was not that bad. But however, I feel I could have done much if it wasn't for the technical issue. I have sent a complaint to ACCA and I hope they will consider my issue. I personally feel they should have informed about the remote session right after June itself rather than informing 1 month before.

I could be wrong of course but I read the dividends in the Foreign NPV question just as confirmation that all would be remitted to the parent in the same year which those cash flows arose. And again could be completely wrong, but for the yield to maturity, you calculate the PV of the bonds cashflows based on the spot yield curve and credit spread. Then to an IRR to workout the annualised Kd (YTM)

Largely agree with Danni, the software is diabolical considering its been around a few years now in the foundation level. Whilst you may think that it saves time with the sums and formulas, which to be fair it does, all that tike saved is lost flicking back and forth through exhibits and stuff. There's not enough screen space to have all relevant information in front of you. Really they need two screens. One for the word processor and spreadsheet and the other for exhibits and requirements.

hi everyone, does anybody remember how the cost of capital was calculated in the 3rd question when doing the NPV i just could figure it out and its driving me crazy remembering about it. the question had 4 different investment appraisal techniques to use. Any feedback is much appreciated. Thanks

I had the same questions. If I remember the q gives you the mv of equity and the mv of debt plus the pretax kd so you only needed to find the ke. Beta asset was also given so can use the asset beta formula to find be. Plug this into Capm and wacc it and gives you a do of 9%. Hope this helps?

You are on point mate, you sound like you have passed if you managed to answer the other discursive questions as it wasn’t hard. I totally slipped over the bond to maturity question as the information gathering looked too time consuming. I would have confidently said I probably pass had I not stupidly mismanaged the last hour on the foreign NPV question. The question was actually straight forward but I couldn’t get my head around the choice of words, as it wasn’t too clear to me on certain points like the tax exempt for the land disposal, the €10 sale etc. I have learnt it many months back, but. Just totally forgot about it. Really kicking myself now, as I could have spent that time cracking on with the bond question and would at least secured marks to boarder line pass the exam, now I’m expecting marks in the region of 45-53 :( Same situation as the SBR exam I took yesterday!

Agree 100% with you on the damn screen size and flicking back and forth to refer to the exhibits and word processor. Definitely need 2 screens in order to work efficiently otherwise this is clearly a disadvantage on taking cbe exams compared to paper exams with the same time allocated. So unfair.

Ya, I did exactly this.

Exactly I was suffering the Same screen limited space issue on my laptop but then I decided to to do it on my 27 inch screen. I was totally satisfied as I was able to display word, excel and the question at the same time.

That is so sad my friend. My AAA exam got freezed in the middle as well. What is a reschedule form?

also using 20% tax

sounds like CBE question more easier.

As for yield to maturity, I calculated it exactly in the way you described. But now I think that perhaps we should rather use the formula using mkt value (mkt value = CF year1*(1+r)+CF year2*(1+r)^2 etc...) and calculate r as ytm

The hedging part was a let down, I thought I mastered futures but the question was twisted, provided contract in indian rupees and I'm sure it confused a lot. I think the loss on futures had to be converted in dollar and then multiplied by no of contracts and contract size to get the correct figure. I didn't convert to dollar and rushed through it. The question resembles a previously examined question namely Washi which came out in sep 18. The futures however were denominated in the local currency which made it simple. Totally disappointed, I revised AFM for months and didn't expect a question of such sort.

The more I think of the exam yesterday, the more I think I will be resitting in December.. the NPV q in Q2 completley threw me and I wasnt able to answer the discussion element due to time. FX Q - I think I did ok on part a but again the FOREX/currency swap question was left unanswered as I thought these were the same. Q1 I thought I did ok but the more I look back I think I made a mess of the beta element I got 43 and 44 in my last two attempts of AFM, praying that I get the 50 this time I dont like the CBE platform, many silly little things are taking too much time in an already time pressured exam even with plenty of practice