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Were there any tricks with Ke calculations? I simply put Be into formula, however there was Ba as well but I don’t remember anything about capital structure change
nataly1986 wrote:afmp4 wrote:nataly1986 wrote:
afmp4 wrote:To NatalyIf a debt is being used to finance. Then capital structure is changing
Come to think of asset beta should have been used. ba not Be. equity beta includes more risk due to debt. But as we were doing apv. We would discount cash flow under normal cost of equity Ba and then do the financing effect for apv . But I never got to that part as I skipped foreign appraisal from syllabus and stopped at basic Npv calculations.
97shoree wrote:Question 1 – Foreign investment
Joint venture and subsidy caught me off guard as well and I was prepare to leave it , as saw nothing like that in syllabus or past exam, but as I had time . Just thought about it and it was quite simple when you think the nature of the two.
Like can’t have transfer pricing advantages and tax saving. Also not being able to fully control having all the voting power. Power struggles . All such issues if operating as a joint venture..and similarly having more capital at your disposal. More synergy if operating as joint venture. Perhaps more expertise from.human capital
97shoree wrote:Question 1 – Foreign investment
Haha question 3 on mergers was actually too simple for the calculation part. Can’t make more easier than that.
But the discussion part was challenging as three companies were involved altogether. He presented his scenario in a very traditional linear way. But the requirements was very odd that got my head rolling as the examiner wanted the perspectives from different companies on different matters not just strategic importance of being acquired. Considering there were 3. I actually wrote a from a Pov of a company that was not asked for.
He even asked what if two target companies merged that the acquirer is seeking to acquirer . I read that requirement twice before answering it. Like he seriously wants to know that as well
Lastly for treasury department, was asked in managing economic risk. Not conventional risk management and this question never appeared before. Economic risk is outside the realms of treasury department and discussion was to be carried on thT
Glad others felt the same regarding questions 3. I thought the discussion for Q3 was okay for – if they would make a good acquisition fit and defence strategy. Think that was worth 10 marks.
For the treasury department question I took a different approach. Economic risk relates to FX and interest rate movements so hedging strategies are managing economic risk. Spoke about well diversified investors in perfect markets don’t require unsystematic risk to be managed but then caveated to say how markets were not perfect and hedging avoids situations of financial distress and certainty for planning.
For me on subsidiary, i mentioned factors like not being able to make remittances, if coalition govt breaks down, govt changes the details of the contract, while for Joint ventures gave factors like being able to make remittances, avoid nationalization.
Where in India were you supposed to write the CBE? I’m from Bangalore, and in March, the CBE location was in some remote place on the outskirts of the city and was afraid of something similar happening which is why I decided to wait it out until June, but faced technical difficulties nevertheless.
As always time pressure. And now the optional exams will be on CBE which means even more time pressure. We should all complain about it to ACCA. The should increase the time for the CBE to 4 hrs at the optional level. The US CPA exams are also computerized but the duration is 4 hrs. What about ACCA? It’s unfair to because there are no technical difficulties related to network, typing, freezing screen etc with paper exams. But these extra difficulties are part of the CBE. So we should all let them know our displeasure.
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