June 2014 Examiner's Answers

Question 4: The wording is different in the two questions, and what the examiner has does is perfectly correct in his answers to both of the questions. In THP, you are told how much is raised from the rights issue in the second sentence. Later, you are told there are issue costs and so these need subtracting from the amount raised to find how much is left for investment. E.g.: if you raise 100 and have issue costs of 10, then 90 is available to invest. In June 2012 Question 4, you are told how much is needed for the investment and later told that the issue costs come out of the amount raised. So the amount raised has to be the amount needed for investment plus the issue costs. E.g.: if you need 90 to invest and there had been issue costs of 10, then you would need to raise a total of 100. With regard to question 1, if you explained properly then you should not lose any marks.

Sorry - I take your point. He has been inconsistent in the June 2014 exam - he should really have got the TERP as being $4.54 per share. The reason for the market capitalisation ending up being different is really due to assumptions. The TERP assumes that shareholders do not know what it being done with the money raised. You obviously accept that it ignores how the money is being invested (and that will effect the actual share price and therefore the market capitalisation). We would normally assume that the shareholders would not know what the issue costs would be (for calculation of the TERP) although again, it would affect the actual share price and hence market capitalisation. Don't worry too much about it - I am sure it will be allowed for in the marking. I cannot comment on your paint about F6 Maltese. With regard to the F9 questions on receivables, I think I can guess the questions that you are referring to. However, for written questions, the examiners answers are only suggested answers and the markers are told to give credit for all sensible points. Both answers to the questions that I am thinking of would have got the marks.