• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exams

How was your exam? Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for June 2025 exams.
Get your discount code >>

Faoilean co june 2014

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Faoilean co june 2014

  • This topic has 3 replies, 3 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 1, 2019 at 7:54 am #551334
    rimshy
    Member
    • Topics: 95
    • Replies: 91
    • ☆☆

    Part a please explain option to delay option to abandon and option to expand linked to the case study given in part a i am not able to link these options to the scenario well

    November 1, 2019 at 9:40 am #551354
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54675
    • ☆☆☆☆☆

    The question says that they are considering buying the rights to the initial exploration. If they buy the rights then they do not have to then do more work after the initial exploration. Once they have done this, then they will know whether it is worth continuing or not – so if not they will abandon, but if yes they will expand the operation.

    August 13, 2022 at 3:24 pm #663027
    acnam
    Participant
    • Topics: 1
    • Replies: 4
    • ☆

    Hello,
    I want to know, why the answer to Faoilean question, part b) say that shareholders have a CALL option on the business? I searched already in the forum for your explanation of this exam question: “Holding shares in a company is similar to holding a call option because if the debt in the company exceeds the asset value then the shareholders can walk away (due to limited liability) whereas if the assets exceed the debts then the shareholders will continue in the business in order to get the surplus”, which I understand. But is this not similar to PUT option? They can sell shares at market value if they do not want to hold shares in the company anymore. What am I missing?

    August 14, 2022 at 11:51 am #663050
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54675
    • ☆☆☆☆☆

    What makes it similar to a call option is that if the business does well then there is a gain to equity whereas if the company does badly the ‘loss’ is limited because of limited liability.

    Nobody is selling shares – it is just a way of placing a current value on the business.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • mrjonbain on What is Assurance? – ACCA Audit and Assurance (AA)
  • Ejueyitsi-Toju on What is Assurance? – ACCA Audit and Assurance (AA)
  • sadik.sadka on How to make the best use of OpenTuition
  • SONIC916 on Lessee accounting – ACCA (SBR) lectures
  • AkinMike on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in