AFM*** P4 December 2014 Exam was.. Instant Poll and comments ***

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Terrible is one of the words to describe it! What do you guys think?

Could not agree more. Disaster. Which questions did you attempt guys?

Cant we be unethical for a while to say few words for this p4 examiner? Such scattered info in q1 and asked for every single thing in question 1 from blackscholes to wacc and valuation to benefits.

Q1 , Q2 and Q4. Q4 was the EASIER of the lot Regrettably spent the least time on q4 - EVA and part c) on performance was very doable :( Q1 had blackscholes?real options? i failed to notice that..

At one moment i was about to cry!!

That 50 Mark question is getting harder and harder each attempt.

Kamdar yes q1 has blacksholes and most of the people missed it because dont know what this examiner actually wants! Instead of volatality he gave probabilities n all that ! This was not just limited to blackscholes. Q1 was completely a diasaster. Used maximum time and almost all of us ran out of time

Can somebody please tell me the main differences between futures and Salam contracts

Someone really upset this examiner off been this time round, as this exam had elements of p7 p5 and f5 all in one exam, plus there was no standard deviation so i just used any figure. There was decision trees in that Q1 aswell I think, theres a good chance I will be doing this paper in June, if you had studied P5 with this paper you may probably would of done ok. How much marks do you get for workings because thats going to be the deciding factor here?

Risk of default and advance payment !! Thats the key difference

For the cashflow in Q1 was it right to discount at the Ke? I did not calculate WACC because we were given the free cashflow to equity is this right?

Haha, then I made up a different Salam-like contract :)

In Q2 it said the futures basis difference was 44 points, but does this mean futures is higher or lower than LIBOR?? So if today libor was 3.8% does this mean futures today are 4.24 or 3.36??

I tried it for the third time and i am very dissapointed. Instead of testing knowledge they are testing speed. I only tried q1 (not even finished) and q2. This was the case with all my attempts. I knew how to do all of the questions, even if not perfect, but for sure if i had more time i could score more than 50%. I cannot believe they are actually evaluating speed of answer. We are not manufacturers, we are accountants! P.S. I tried all methods like attempting q1 first, or last, this time it was second/in the middle, but didn't have time for the third.

4.24

oh and I valued a put option for Q1 because it was a right to sell so thats a put option right?

I couldn't believe how easy Q2 n Q3 were. Q3 in particular. Now coming to Q1, what a disaster. Little time to do option, then i realised there was no straightforward info on standard deviation/volatility and a possible way was doing it using the probabilities. By this time had lost a lot of time so moved on. Q3) Value at risk : can someone tell me if confidence levels examined were 95%n 90%? I saw the first no was 95 so did not pay much attention due to time pressure n calculated next one at 99. Later a friend told me it was 95 and 90.

I was just laughing all the way home after exam. I spent every single minute available, and I still won't score even 10 marks in total. How ridiculous waste of time and money was it to go there in the first place :D Well, no I know to practice more. I hope you guys did well, I'll nail it in June.

I agree with you guys This paper was just terrible.

anyone know how to get beta of luxury transport out of beta asset and beta non-luxury transport business?

Agree that Q2 & Q3 are fairly straight forward except for the Sama-like contract that I just invented. Q3 is for 95 & 90% and you need to look up the z score from the normal distribution at the end. I believe 95% is 1.65 and 90% is 1.3 or 1.4

can someone please let me know what answer you got for the interest rate options this is where I think I messed up

Williams1977- I thoght of decision trees also, but when i realised i needed volatility for the black scholes i tried to calculate the decision tree-like for the period after the second year (relevant for the option) i skiped the Salam all together :) it was only 4 pt ????, i only remembered musharaka and mudaraba, so .... Bad luck.

It was 90... Agreed q3 was easy and q2 was doable but spent so much time in q1 that I did half of q2 and half of Q3. Seems the examiner is not trying to test understanding of the actual, but how fast you write. For those who actually know how to do the questions and can answer it correctly if it wasn't so rushed, lose out compared to those who just 'wing it' to get half correct answers. What's the rationale behind this and what is Acca or the examiner trying to do? So so ridiculous. For q1 I calculated the probability of each scenario (scenario 1, 60%, scenario 2 25% and scenario 3 15%) and took a weighted average of npv. Yes I calculated a real put option value. What was the conclusion in part c 3? Was the acquisition beneficial?

What a disaster ...I literally didn't know where to start with Q1 .so I only did q2 and 4 just as a practice match safe in the knowledge that I will be writing this paper again in June. question 2 and 4 was all about the proverbial "test yourself under exam conditions." if you know what I mean ..haha And so I had all the time in the world since I only attempted like 15% of Q1

I have never written an exam this hard in my life!!! Q1 was HORRIBLE. What was that about the MP being multiple of 7.2 and the combined Freecashflow increasing to 7.5??? And then there was two different probabilities with two decreases in cash flows??? Oh my God!!! I saw the put option BUT it gave me a negative figure by the time I was done with the value of the call option, I didnt bother to complete the put option! My figures were just going bunkass today in that Q1. God knows I seriously need help! For part 1a, please was that revenue, cost and financial synergies?? The reason why Nahara co would want to diverfisify risk and acquire undervalued companies? As per WACC combined, I didnt know where it fitted into any of the requirements, nevertheless I calculated it still. If they said this examiner is better than the previous one, then I must be missing the correct definition of 'better' cos I thought it meant questions will be 'doable'! Enough said!

Can someone just recall me the question parts in number 3 please. 1st part was on calculation of missing info...then...

@nabiil said: Can someone just recall me the question parts in number 3 please. 1st part was on calculation of missing info...then...

something about legal risk on taking drughi project. I made that sh*t up. lol

Hi Felix Refer to the examiner's answer for Dec 12 Q1 Coeden Co Same approach was required. It is some sort of weighted average