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Daikon co

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Daikon co

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 10, 2022 at 4:52 am #650617
    Frooti
    Participant
    • Topics: 92
    • Replies: 83
    • ☆☆

    Why they have taken additional cost of borrowing of 136000 why not the increased cost of borrowing 867000.

    Also while calculating premium cost why is 8.1 why not 22.3+30.4=52.7

    March 10, 2022 at 7:15 am #650709
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The third line of the question asks just about the extra cost of the borrowing.

    When creating a collar, they pay a premium on the put options that they are buying, and the receive a premium from the person who is buying the call options from them. The whole point of creating a collar is to reduce the net premium payable – there is no other reason for creating it.

    Have you watched my free lectures on collars?

    March 13, 2022 at 3:11 am #651193
    Frooti
    Participant
    • Topics: 92
    • Replies: 83
    • ☆☆

    Yes i have . Thank you

    March 13, 2022 at 8:12 am #651206
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome. (Incidentally, I see that I had accidentally missed out the word ‘other’ in the last sentence of my explanation of the premium in my previous reply. I have now inserted the word!! Sorry 🙁 )

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