FM*** March 2023 ACCA FM exam – Instant Poll and comments ***

So, got really nice part C bits, but I think I bombed on two of the part B questions, mainly the hedging and convertible bonds

What is floor value of bonds? Wtf

What the macroeconomy question

I don’t remember a floor value q. But I had no idea about fintech. I just selected all. Islamic finance in detail was also a bit of a shocker.

Floor value of convertible bonds.....(!) This one was hard.

Second attempt. That NPV Question without Inflation,Capital Allowances and Working Capital really sucked as I studied so hard for a 10/12 Mark PV Question. Second exam they gave crap marks for NPV and on top of that they also gave a discounted sensitivity question I had no Idea to address. The other Question C Question was a very hard Raising Finance Question. Again was really expecting a 10 marker WACC or 12 Marker Working Capital Question.. The Section A had a few simple ones but Behavioural Finance question and what is Fintech lol?? also tough IRR question along with another few toughies Section B had Exchance section in which they asked"Leading amount" again I didnt know to answer? Hedging too. Their was 4/5 easy enough ones to answer but got confused in a WACC Question with the 6% loan notes and the value?? Thy had the nominal and the amount in SOFP but couldnt find the MV?? Going to need a lot of luck to pass and definitely found this harder then the September one. Ahh well June will have to do otherwise

I found it OK. Did not expect an Islamic Finance discussion question to come up in section C, that really threw me off.

Part C was TERP, EPS, for current and expected investment Discuss on Directors view, Small shareholders view(10% own) - raising more shares will not enough cash for new shareholdrrs, and large shareholder view (50% own) want current EPS for new investment. Islamic finance : to discuss about raising finance with TERP (6 marks) NPV without inflation, TAD and working Capital. SectionA easiest No.1 question . Finance manager goal . Maximize stakeholders wealth. Fintech Question - I choose others 3 apart from Face to face . ( Bigdata, Ai and the other one) part B was disaster. 4 more marks again for Islamic finance.

Section C had a question about sensitivity to discount rate. Now I’m trying to remember, was it sensitivity to sales discount rate, or sensitivity to discount rate(as in discounting factor)

It was the discount rate as in discounting factor. I think you were supposed to find the IRR and then find percentage change in discount rate to IRR as that percentage change would have reduced the NPV to zero. I can’t be sure if my percentage was correct for the sales volume sensitivity. I divided the NPV by the PV of contrbutions over 4 years. I think I found 4.5% but I can’t be sure whether I should have added the tax :( I think I should, right?

Ha I made a mistake then. Should have done the IRR easily. I read the question wrongly Also about the tax, I am not entirely sure, but I don’t think you should add tax.

Does anyone remember the breakdown of part C? NPV part 1 which was the calculation was 11 marks and part 2 was the discussion was 9 marks??

Does anyone remember the part a question about the 3 companies and you have to describe what type of finanavjng it is.. aggressive, conservative or matching. what did you guys put?

As far as I remember, Section C NPV spreadsheet part was 13 marks and discussion of DCF and inflation rates was 7 marks (NPV was positive in my answer, sensitivy to sales volum 4.5% and sensitivity to discount rate 45%). Then rights issue q spreadsheet was 14 marks including discussion of directors and shareholders’ view. And then Islamic finance discussion was 6 marks. I wont be getting any marks from that part. I am a practising muslin but have absolutely no idea, hadnt found it an important part of the syllabus… Part A working capital financing question with 3 different companies, I selected aggressive to be with highest profit lowest current ratio and conservative to have highest current ratio and lowest profit. I didnt select any to be matching one. Part A fintech q had three options AI, big data and face to face interaction. I can’t find an answer to it in Kaplan’s study text. Part A islamic finance q I think it was a credit agreement with supplier so I selected murabaha. Hope that’s correct.

There was a question about money markets. One option was that it was for smaller companies. Is that correct? I thought why wouldnt it be for larger companies with short term borrowing needs and didn’t choose it to be correct. This was my first applied skills exam. Do AM and PM sessions get different questions? There’s a mention in replies of a floor value convertible loan question and really really don’t remember seeing such thing. There was think in part B a question with convertible loans, share price was something like $6.5, expected to grow 5% and in 7 years time you could convert loan notes to 15 shares and that was higher than the nominal value so one should have opted for that. But I can’t remember it mentioning a “floor value” :( I wish they told us our results from part A and B immediately, so if we scored below 30 there we would know we’d have to resit. The wait’s gonna kill me. Also are we allowed to discuss questions in detail. I think I remember almost all numbers in section C questions.

zeynepsaribas Npv was around 59 something. Answer for money market question 2 only because i think 1 was more than year and 3 was for small companies. What did you write for dcf inflation?

Yes the floor value question was a surprise! I’ve never seen it mentioned like this before. Also first A question really surprised me - calculate cost of equity. Not all numbers were easily given, you had to get them by rearranging formulas which completely thrown me out. My C question was NPV but only for 6 marks, no inflation, no tax, not a typical NPV question. I was hoping for a long NPV for 11 marks or so and I think I will hardly get marks in mine. There was also a question about sensitivity analysis and I can’t remember the rest. Other C question was about ratios and working capital investing and financing strategies. They are different set of questions. My exam was in the morning.

I couldnt write anything for DCF with inflation discussion and neither for Islamic finance. Overall I lost 13 marks from word processor parts. So disappointed. I mean I wasn’t that well prepared but I could have discussed different types of risk or working capital. My NPV was I think ~141

Did anyone have question regarding prefernce share with an option of its hard to value prefernce share due to dividend rate change? Did anyone get working capital in section b? What were the answers to question?

saulatr I had that question re pref shares being difficult to value and I think I selected that option. What was the other choices that were presumably incorrect? The working capital q I had in section B asked for average trade payables day or average of something where we had previous year end value and this. I took the weighted average to calculate days, was it 40 days. (215+275)/2/2250*365. What were the other questions of that case I’m trying to remember.

One question was regarding consequence of delaying supplier payment with options 1 supplier will not have a bad impact because it didnt default 2 they will have to make cash purchase not credit 3 they have bad relation with supplier 4 cant remember lsst one it was like increase working capital or like something There was one more regarding working capital with increase or decrease. I choose one with recievable What was your annual benefit mine was 11.4

Can anyone remember what the section c breakdown for the working capital question, NPV question and Risk and uncertainty question, my mind has gone blank ?

Why can’t I view replies? Help

Ah yes consequences of delayed payment I think I selected where they may have to pay cash. It didn’t make sense to me that delayed payments wont effect reputation but now from outside it actually makes sense right? I don’t know. Yes I chose one with receivable too, how to reduce working capital cycle? And I think answer was like by offering early settlement discount to receivables which would reduce the time they take to pay so reduce the cycle. My benefit was 12.1 [1+(.75/99.25)]^(365/24)-1 but for the life of me I couldn’t figure out whether to take it or not, said to accept in the end.

I did the same cash and effect the repuation. I also select receviablenone too. Do you remember the last question for working capital?

No I can’t remember it but I remember currency exchange question. I think I’m better at remembering numbers. What was the dollar amount of forward contract? I couldn’t decide whether to just write the value in 6 months by dividing 6 month forward exchange rate or the amount to deposit now to pay in 6 months. I answered with 6 months time amount 1800/53.42=33.7 if I remember correctly. Nothing I decided at the time makes sense now :(

I think mine was 33.2 just the value dividing by six month forward contract.

Yes that’s what I did too. Thanks

Was your answer 33.2 or 33.7?

What were leading cost and money markey hedging cost?