*** F9 June 2015 Exam was.. Instant Poll and comments ***

Jenny, so, not allowable balance in last year 4 in question 5?

Theory was over half the paper..let’s have some more theory :D..

What did you guys write for;
Dividend growth model/ Earnings Yield merits?
Sensitivity analysis?
Marketing hedging situations?

@emo777 said:
Jenny, so, not allowable balance in last year 4 in question 5?

No, no need with straight line. The $5m less the scrap of $0.5m gives amt to depreciate of $4.5m – divide by four years will give equal TAD relief of 338 (rounded) in each year.

Yeah, Jenny , you are right. Guys, so, there is not allowable balance in year 4 in question 5. The same value for each year. Happy got this one right at least, though forgot to deduct scrap value from capital cost :/

@jimbob1212 said:
Theory was over half the paper..let’s have some more theory :D..

What did you guys write for;
Dividend growth model/ Earnings Yield merits?
Sensitivity analysis?
Marketing hedging situations?

DGM/Earnings yield merits – left this til last and ran out of time so very little on this – so used to focussing on disadvantages!!! Think I said DGM good for minority stakeholder valuation and EY can incorporate growth.

By the way, for the calculation of EY value – were we supposed to incorporate growth – I wasn’t sure because it didn’t say forecast to continue so did with and without.

Sensitivity analysis – got a bit carried away (hence running out of time later) and calculated after tax PV of revenue for sensitivity to selling price before getting hold of myself and saying only really measure of change in variables etc, not way assessing risk but good for highlighting critical variables. Hopefully picked up some marks.

Hedging wordy bit – explained how FRA works but again think I wrote too much (gave example) but it was for 5 marks so…

Jenny, what about market segmentation kinks, financial intermediaries and point with the beta of debt as zero understating financial risk?

hi guys, personally i didn’t have sufficient time to practice and revise and so i think that i could have done way better today – but hey, I will stay positive no matter what.

As for a few comments re: venture cap’s – Yes they are intermediaries however i think that they are NOT institutional investors/intermediaries. Pension funds, insurance companies are institutional investors. Not sure how the question puts it again but i think it asked for ‘institutional investors’ in which case Venture cap isn’t a part of.

IRR i think i got 17.2 (cant rememeber now, i know there were two figures with 17.something but it was the 17.something with the lower digit)

Ev for selling price i used 29 as well…

I immediately spotted my knowledge gap the moment i opened the question booklet and although not excusable, it was all down to insufficient question practices and no past question revision :/

best wishes

Jenny, they did not require us to calculate sensitivity in the last question, as far as i remember

@emo777 said:
Jenny, what about market segmentation kinks, financial intermediaries and point with the beta of debt as zero understating financial risk?

The financial intermediaries one – I think they all were – definitely pension funds and merchant banks but it did say VC ORGANISATIONS so I took that to mean a way of bringing VC together with companies – could be wrong though.

The one about the market segmentation – that does explain the kinks so that was true, downwards sloping curve when rate falls expected, also true but didn’t know about the other option – investors wanting real returns – kind of guessed they meant liquidity pref theory there – and the reference to real returns meaning higher yield to compensate for time value of money so said all three true – not sure if I’m right?

I can’t remember what the choices were for the debt beta one – think the other two were correct and I thought that was false?

and by the way, was anyone else caught out (or nearly so) with 360 days to use for receivables calculation? I had gone a bit far into the calculation using 365 days before i realized at the end that examiner pedantically specifies 360..

The factor wasn’t a viable option anyway… well, that’s what i deduced. don’t know if i was correct.

@emo777 said:
Money market deposists are loans, but they are not loans between banks. They mention libor in this case. Money deposists are loans between banks and depositors, not between banks

But the question said such as loans between banks

correct, I struggled so hard fighting the temptation to bombard the examiner with SA calculations but then i figured that i would only be wasting precious time doing something that’s correct but irrelevant and unyielding …

but i added the formula though NPV of project/PV of each variable within the porject as that helped to establish the point about the subject itself

Jenny, what was your assessment on mcq where they gave definition of money deposits? I think that one was incorrect