• 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

20% off ACCA & CIMA Books

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

Fitzharris co

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

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • September 5, 2022 at 10:43 am #665213
    abin111
    Member
    • Topics: 6
    • Replies: 10
    • ☆

    Sir, the bpp kit answer directly takes the interest rate as opposed to how we calculate effective annual interest rate on options,I tried how we calculate effective annual interest rate by calculating the borrowing cost,premium,loss on options as a percentage to the loan amount (not multiplied by 12 months as the question requires annual rate),but got a slightly different answer.Should i always stick to adding interest directly method for collars?And also why is that both methods give the same answer for other questions but not for this question?

    September 5, 2022 at 5:49 pm #665263
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    The BPP answer is a copy of the examiners own answer 🙂

    I am not 100% clear as to what it is that you have done. However if the difference is only slightly different then I would not worry about it. The marks for this sort of question are not for the final answer but for proving that you basically understand how different types of hedging ‘work’.

    September 5, 2022 at 6:16 pm #665284
    abin111
    Member
    • Topics: 6
    • Replies: 10
    • ☆

    Sir,if base rate rises by .4% to 4.1%, i calculated borrowing cost 2.208 million (48 million *4.6%) + premium (576 contracts * 1 million*.013 premiun)/400=2.2267 million

    Effective annual interest rate=2.2267/48*100=4.64%

    Bpp answer 4.61%

    Bpp takes interest rates directly for this collar question, how to know which method to use?should all collar question be done with directly taking the interest rate?

    September 6, 2022 at 7:45 am #665341
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    It doesn’t matter which way you do it (unless the question specifies). As I wrote before, don’t worry about the answer coming out slightly different 🙂

  • 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 Presentation of financial statements – Example 1 (revision) – ACCA Financial Reporting (FR)
  • mohammedayan31 on Presentation of financial statements – Example 1 (revision) – ACCA Financial Reporting (FR)
  • John Moffat on The capital asset pricing model (part 2) – ACCA (AFM) lectures
  • John Moffat on Foreign exchange risk management (2) Part 1 – ACCA (AFM) lectures
  • zainab@24 on The capital asset pricing model (part 2) – ACCA (AFM) lectures

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