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Conejo Sept/Dec 2017

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Conejo Sept/Dec 2017

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 3, 2018 at 11:57 am #439860
    boma77
    Member
    • Topics: 70
    • Replies: 97
    • ☆☆

    Dear Tutor,

    In the question Conejo we are supposed to calculate the duration of the new bond. The bond has a coupon of 3,57.
    As the face value of the bond is the same as the market value (100) this means that YTM is the same as the coupon, in this case 3,57%.
    The examiner has discounted the cash flows with the YTM (yield curve + spread), but would it be acceptable to discount at 3,57% in order to calculate the duration?

    Thank you.

    March 3, 2018 at 12:17 pm #439879
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    What the examiner has done is correct, and to discount at 3.57% would be wrong. However you will still get most of the marks for that part (assuming, as always, that your workings were clear enough for the marker to be able to see what you were doing 🙂 )

    March 3, 2018 at 1:23 pm #439889
    boma77
    Member
    • Topics: 70
    • Replies: 97
    • ☆☆

    Thank you.

    March 3, 2018 at 4:00 pm #439928
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Conejo Sept/Dec 2017’ is closed to new replies.

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