AFM*** P4 June 2012 Exam was … Comments and Instant Poll ***

I thought only 5 year value at risk was asked.

i didn't find a share price for nente and i think the synergy savings needs to be estimated into the foreseeable future. i didn't get that far.

Q1 was a nightmare. It threw me, badly written, and I just went blank. Definate fail. Was in tears at the end.

Q 5, 2, 3, 1 in that order.

So annoyed as spent so long preparing for exam.

ngosyvinh said 47 minutes ago:
Arunah: Still use PE, but i am not confident on my answer. I assume number of share is the same for Mije (10 Mil). Earning for Mije co increase 150,000 $ (cost-based synergies) so the share price of Mije increase= (3,350,000/10,000,000) – current trading price of Mije ( i do not remember). The share price for Nente, i think i totally wrong when assume earning per share is the same. What about your answer?



Oh hmmmm..u used it to value Mije's share and I used it to value Nente's share, cos they did mention that after the purchase the PER would be the same as Mije's. I went completely blank in trying to find Mije's share value, but it makes sense to me now that I could have used PER for that also. Sigh.
Sorry but I really cannot remember my figures exactly but I used it to calculate the share price and not the PER. So, even though we used the same method it was used in different ways to derive different answers..gosh...fingers crossed ***

I have been passing all exams uptil now in the first attempt but this one blew the shit out of me. The questions demanded so much time in grasping the exact requirements & the paper was clearly kinda undoable in the alloted time. The pressure of the overall difficulty level of the paper made many(including me) to mess up with the ones they knew even. Good luck to all & an advice to forget abt this paper & focus on your next papers(if any!). Regards.

The only consolation is that I'm not alone who feel bad about P4. It was definitely a mind-boggling exam, the requirements seem to be reasonable but how to go around with it and provide reasonable answers freaked me out. Anyway, we will keep on trying until we succeed and get qualified :)

I did something strange in q1. I used my firm value after fcff - value of debt to get the market value of the shares. I then used this to get the price per share. I used the premium paid as a reduction to the post acq value of the predator in the cash proposal. I used the changes in the shares outstanding to also answer q 2. My wacc was based on a regeared beta. If 75% of equity and 80% of debt is non component activities, the 1 - the above percentages gives me the debt and equity values for the component activity. I used this to regear given the percentages available and got a wacc of 11%. That's what I used to discount my fcff.

@platinumkp said:
I did something strange in q1. I used my firm value after fcff - value of debt to get the market value of the shares. I then used this to get the price per share. I used the premium paid as a reduction to the post acq value of the predator in the cash proposal. I used the changes in the shares outstanding to also answer q 2. My wacc was based on a regeared beta. If 75% of equity and 80% of debt is non component activities, the 1 - the above percentages gives me the debt and equity values for the component activity. I used this to regear given the percentages available and got a wacc of 11%. That's what I used to discount my fcff.

Yes with the value of equity: used FCF under dividend growth model and substracted debt to get the value of equity.
For Q4- yes, we should have used the date from the question- Ve and Vd specific for compoenent parts. I assumed that beta equity of my source data was and average of its two activities and obtained the beta and then so forth with ungearing and gearing...I have obtained a WACC of 13%.

Someone said that in Q1 - point d, they asked us to comment on shareholders reactions and also estimates used: I think here we should have spoken about dividend groth model, the groth rate assumption, the estimated synergies given in the question and the BS model used in poind c.
Correct me if I am wrong.

To be honest I stayed on Q1 more with 20 minutes that I should. This left me only 15 minutes for last question: I tried Q5 and writte like 1.7 pages about 3-4 risks and mitigation.

Hope we pass. Its a very time pressure exam !

@virgilbucur said:
Yes with the value of equity: used FCF under dividend growth model and substracted debt to get the value of equity.
For Q4- yes, we should have used the date from the question- Ve and Vd specific for compoenent parts. I assumed that beta equity of my source data was and average of its two activities and obtained the beta and then so forth with ungearing and gearing...I have obtained a WACC of 13%.

Someone said that in Q1 - point d, they asked us to comment on shareholders reactions and also estimates used: I think here we should have spoken about dividend groth model, the groth rate assumption, the estimated synergies given in the question and the BS model used in poind c.
Correct me if I am wrong.

To be honest I stayed on Q1 more with 20 minutes that I should. This left me only 15 minutes for last question: I tried Q5 and writte like 1.7 pages about 3-4 risks and mitigation.

Hope we pass. Its a very time pressure exam !

There has to be some moderation. I'm usually pretty good with time but had to drop 15-18 marks on q2 this time. But on the plus side q5 was nice and I also did q4 which I feel happy with. Hoping for 30-35 marks from those.

I only really criticised the growth assumption but cut ally really didn't have time to say more. The assumptions are a lot on that one. It's a shame really.

I know they better give me the professional marks. Also I am really hoping that there is some form of moderation on the marking scheme.

Otherwise I've just pissed away my all first time pass record

Lol man.. You guys are sick.. The paper was damnnnnnnn easy.. Expecting above 60!

Strange paper. Can't decide if it was easy and I missed the point as I expected it to be harder or if it was hard.......q1 I definitely went way over. Took a long time to work out MV of shares and I think in the end did something with the P/E ratio and Earnings figures. BSOP was ok but put 5 years in instead of the delay of 2! Q2 then seemed too easy which ,ales me wonder if it was correct/ along the right path. Q4 was ok except again took a long time to decide what to do with the Betas. In the end I took the 1.4 and u geared on the 20% and 25% values. Then the other Beta I unguarded with the remaining values. Took a proportion of both, added together and then re-geared with our company MVs. Not sure if I read way too much into this. Unfortunately only had 15-20 mins to then do Q5 which was a nice question but no time to get into it. My fingers will remain crossed until result day!

I miss bob.i had failed 3 times

The share price for question 1 that i calculated was higher than the price offer by the buyer, then i just make an assumption, to assume the share price is lower than the price offer, in order to calculate the % gain ^^
does it make sense?

Unexpected. I found Q2 ou of P4's topic. After spending 5 mins reading the requirement I managed to write something. Q5 was accessible. Q 1 verry long and twisted. It took me ages and i even plug wrong period in the BSOP model.
Any way good luck every one. Many thanks to those who uploaded LSBF Mock exams. Although they are not even close to the real exam they are a good chance to practice a new type of question,

@admin,

Include please VAR in Opentuition lectures. It is second time it was on exam, i had no idea how to answer it.

shishir malde should be fired, on producing terrible paper, and for making the pass percentage even more low.

Q5 was on european debt crisis. country mentioned in the question was different.
option Q4 Q5 was better except some twist on equity beta. but Q1 and Q2 really troubled me. I dont know wat is going to come as result. hope for best

It was a very sad day for me yesterday. I feel all the efforts i spend in preparing for the exam has come to nothing. Question 1 was so loaded that it was almost impossibe to decide where to begin. Examiners may note that, under the pressure of an exam, candidates cannot find information that are deliberately hidden in the question, So much to do, so many twists and turns!!!!!

I failed this paper twice already. I passed the other papers 1st attempt. I think this paper is for geniuses. Maybe Albert Einstein can pass this paper easily? I changed strategy and decided to switch to P7 instead. Studying P7 made more sense to me. I really cannot grasp those weird beta and what nought formulas. I really respect those who pass P4 paper. I don't understand why some still attempt this the 2nd or 3rd time after failing. I made a mistake by choosing this paper. I sat for P7 last Monday and this is my last paper and I answered all the questions quite easily in the 3 hours time. Hope to become member soon. Those of you who did badly or failed, you should consider seriously before attempting P4 again.

I have never failed an ACCA paper so far and this was my last ACCA exam! and it was HORRIBLE!! Really wish i can pull through this one! :(

Anyway, all these derivatives dealing such as options, futures and swaps in the real world is the main culprit of the world financial crisis in the last decade. Not many people understand the complexities of these instruments. Maybe, ACCA should seriously revamp this paper entirely and produce a more sensible and practical paper for all future accountants to pass first time. Or maybe reduce the complexities to the minimum in the syllabus. Focus should be more on practical issues and concepts that can make a better world for everyone. Not beta and alpha concepts and make life miserable for all and world crisis and suffering to mankind.

For first question i calculated Free Cashflow to Firm First, applied the growth of 2%, then discounted at 11% to find the total value of the firm.
I then deducted the market value of debt , got the value of equity and divided by the number of shares to get the value per share.
The follow-on product i used Black Scholes to Price the call option to delay then added that to the NPV (figures given in question) to get the total value of the project. Divide that by the number of shares and you get the additional value per share provided by the project. I did not see relevance of the P/E ratio.
My only worry is that i used four pages only back to back to answer question 1.

Aw i must add that the paper threw me off completely - i had revised futures, options, etc but only got one question on swaps which i did not attempt silly me !

Overall a very tough paper with very little chance of getting a pass mark :(

It was a difficult but fair paper. You needed to have a well rounded knowledge of the whole syllabus. Even though most of the trickier topics were not tested, the fact is any of them could still be included and trip you up, eg VAR.Proper time management was also very important.

Q1 FCF,Share prices,BSOP.
Q2 Gearing, VAR
Q3 Swaps
Q4 IRR,MIRR,Securitisation
Q5 Risks of setting up a foreign subsidiary,Dark pool trading.

@auk84 said:
shishir malde should be fired, on producing terrible paper, and for making the pass percentage even more low.

Could not agree more. The guy is completely disconnected with the reality and the students of ACCA.

Having variations in the exam papers is fine but to muddle information so much is unfair. The biggest issue I have is this, to succeed in P4 you MUST do well on Q1 and Q2. In Q1 we had 3 proposals: Offer, Product options and Share Exchange. HOW ON EARTH THEN the muppet forms another question Q2 which also, incidentally has 3 PROPOSALS? Debt recapitalisation, Sell off and Investment in NCA.

What the heck was he and the examination team thinking? I have never seen a paper where 2 questions are so similar in style, of course requiring different applications.

Ofcourse Shishir Melde should be sent an email from every student on how horrible his exams are and that he is ugly.

shishir.malde@ntu.ac.uk
Tel: 0115 848 4269
Nottingham Business School
Nottingham Trent University
Burton Street
Nottingham
Nottinghamshire
NG1 4BU

@rajad2010 said:
Could not agree more. The guy is completely disconnected with the reality and the students of ACCA.

Having variations in the exam papers is fine but to muddle information so much is unfair. The biggest issue I have is this, to succeed in P4 you MUST do well on Q1 and Q2. In Q1 we had 3 proposals: Offer, Product options and Share Exchange. HOW ON EARTH THEN the muppet forms another question Q2 which also, incidentally has 3 PROPOSALS? Debt recapitalisation, Sell off and Investment in NCA.

What the heck was he and the examination team thinking? I have never seen a paper where 2 questions are so similar in style, of course requiring different applications.

Ofcourse Shishir Melde should be sent an email from every student on how horrible his exams are and that he is ugly.

shishir.malde@ntu.ac.uk
Tel: 0115 848 4269
Nottingham Business School
Nottingham Trent University
Burton Street
Nottingham
Nottinghamshire
NG1 4BU

Out of interest, what is the complaints procedure? Is there one?

sad with the exam, i put so much effort in studying and doing all the questions...3 hours is enough....hope won not retake next sem...

sorry, i mean 3 hours is NOT enough

Q5 not on European debt crisis (EDC) why

1.countries suffering from EDC are going towards bankruptcy and not recovering , the country mentioned in qs is going towards recovery.

2. High unemployment in PIIGS . Larnocias on the other hand has high employment but lower wages.

Issues and risks would include
.Lack of experience: not having enough experience of opening subsidary
.Double taxation
.Exchange rates
.Raising too much finance in equity means loosing ctrl
.Lack of expertise in the subsidary country
.Barriers to entry / competition from local pharma companies but govt is supporting all pharma industries
Well if govt is supporting industries like pharma , the qs is not on euro debt crisis because in countries like piigs the govt are no longer supporting any industries , no grants , tax holidays , nothing
Some thing was mentioned regarding int rates but don't remember

but hell I have been many time wrong in the past and I may be wrong now , not an expert of P4 at all. This is not my first P4 attempt and I have missed easy marks like BScholes didnt realised that in qs 1 examiner was asking about BSM

So scared like hell.

I read the comments, I shared the same feeling. P4 should be more practical and more direct but still technical, such as risk management (options, futures), investment appraisal, bonds price and real options, which more advance than F5 and F9. However, this dies was complex and not practical, something like P2 and F5. (But we did not study those for P4.)

P4 is a very interested paper, examiner should consider about that how the students are being learnt rather than keeping the pass rate as low as possible, and give some questions we would not expect to see, only have 3 and 1/4 hours in the exam hall,

Mr Malde, please consider.