Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › FITZHARRIS CO – Sample Question Dec 2020
- This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
- February 15, 2021 at 10:47 am #610477joevassalloParticipant
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Regarding the question on “COLLAR” I do not quite grasp what is meant by the following answer headed “NOTE FOR TUTORS” at the end of the answer.
Yes I have watched your lectures on Collars and I cannot see how this logic is explained.
Thank you.February 15, 2021 at 2:47 pm #610503John MoffatKeymaster
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I would not worry about it because I think the examiner got himself a little bit muddled because the borrowing was lasting for 36 months. Normally in questions (and I am sure it will be the case in the future) the period is much shorter.
Because the options have to be exercised by the end of December at the latest, and because the interest on the loan is floating, he is suggesting that they would have to keep creating new collars every three months.
Again, do not worry about it. You can never be expected to deal with that situation and he was expecting the question to be answered in the normal way despite the length of the borrowing.
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