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same, I voted hard because of the time element but the exam was OK
I also was confused I thought current swaps and forex swaps were the same thing. I wasn’t even sure how to answer it. I stsrted writing how they work and left it unfinished. The NPV messed me up i was confused as hell.
How was wacc calculated after the issue of bonds? How did you reflect all the bonds in the calculation
I did that at first but then I realized that 0.6 mil is the number of bonds in issue, not value of bonds (otherwise it will be “$0.6m 6.5% bonds”) so I scratched 100 and just multiplies with 104
So hard to tell how that went but i suspect not well.
Q1) Definitely wrong, bond value i somehow got was $108approx and left the ytm
Q2)I got a positive NPV of approx 14m with land and buildings being worth something like 230m and this as an inflow in year 4. Hoping that even if im way out, my justifications and explanations make sense and i get some marks.
Q3) Went for sell futures and buy put options. Said that forwards gave the best return and then talked about it.
Completely in the lap of the gods
Q1 b (ii)Can anyone tell me how the market MV of the new bonds should have been calculated by using the yield info and basis info provided?
iii The post tax profit after accounting for the issue of the new bonds-anyone get 19.250m?
In calculating the new which cost of debt are to use, since we’ve calculated the Yield to maturity of the new debt
I think we just have to assume that the initial post tax cost of debt 4.1% should be used and add the two debt together. But my worry is the 0.6million they use for debt. It looks so small
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, 6 mark question on swaps which I unfortunately left out due to time.
3)NPV, MIRR,MACAULAY DURATION AND a discussion on on the differences in those appraisal methods.I spent too much time on question one and barely linked my calculations to my report in a coherent discussion I could have done quite well, i need better time management, I hope I pass.
I think i’m well wrong then as i took the 0.6mil and multiplied it by 104 to give me 62.4mil debt @ 4.1% and 130something equity at 12.1% (4+0.9*9)
Sounds correct to me. Other people incorrectly calculated debt as 0.6m meaning 0.6m worth of bonds and not 0.6 actual bonds.
I don’t know if anybody has the same issues like mine 🙁 the questions are ok I guess, but I got technical issue. It’s my first time taking cbe test in Hungary (abroad for me), i was panic when i realize the keyboard is different (they don’t show the character printed in the keyboard). I know there must be a switch mode to normal keyboard but i couldn’t find out. The facilitator couldn’t neither, so she helped me by trying match basic items (like + =) with the keyboard. In the end I tried to finish my exam but I lost too much time dealing with the computer. The word processor ran smoothly but others were disasters. Excel stopped running many times during the test. Each numbers were shown after 3-4 seconds like lagging. Formula only runs if i copy one by one, and didn’t move when i move the cell like the normal excel. I also can’t insert a row.
Other windows are also slow. When i open something I have to wait like starting window 15 years ago :(((I know I will have to re-take the exam next time, but really hope acca can do something about the computers 🙁
Grayblue, on myACCA portal, you can complain about the issues you faced and they adjust marks for it. Please check.
Me too! John clearly says in his lecture that no difference between forex and currency swap except that forex is for short term.
I wrote the same. However, could not figure out what else to write for 6 marks!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
I agree with Danni, I found using the Excel slows down my progress a lot.
Q3 hedging was fine, no surprise
Q2 I wasn’t sure what was the 30% increase of vat exemption on land and building
Q1 calculate wacc, cost of equity was ok but the question was very complex, I run out of time.
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