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VAR=STD×Tail Value. So VAR=1.3×1.65
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I passed p4 last sitting with bang on 50%- first time, by following tutors advice of just answering everything- even if I didn’t know how to do calculations- ie attempt calculation, get answer and then analyse that- you get marks for discussion and reasonable suggestions etc. Was tough, didn’t finish the paper but it worked. The professional papers are about showing you can prioritise your time and analyse info. Always remember, what feels like a disaster may not be. Many a time I’ve thought I’ve failed and managed a pass. Be positive and don’t worry for now. If you have done the work, you could do no more!
Also tackle the easy bits first! Ie any of the advantage and disadvantages type questions, bits that can score easy marks easily, giving you time to do calculations!
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Ahmedmirza- Yes, I agree with you!
Guy’s, there is a reason why P4 is the hardest, toughest paper in ACCA, along with P5,
The “Mediocre” P4 paper you get every once in a while is not easy, its just the normal ‘hard’ that P4 usually is, what is expected…
so this time it wasn’t as disastrous as some of the past papers have been & therefore the P4 paper that comes next in Sept will be a lot harder than this..
You can just look at some of those questions like Nahara Co. for example! If it werent for Mr. Awesome John Moffat, i would never have understood nor even attempted that kind of a question after looking at it…& that is P4 !!
@naveedali24 said:
Can any one just convert the 13% into the nominal rate and my ans was 16 %@naveedali24 said:
I also assume that the project is wholly equity financed .. and did you convert the real rate in nominal ?wait what? what real rate? what nominal rate?
@hailey11 said:
buy put or buy call?
buy future or sell future?We are borrowing money, worry that interest goes up. So we need to sell interest futures, so if interest goes up, futures price will come down, since we sell at a higher price, then now we can get a gain when we close the position by buying it back at a lower price.
Put option too, since we want an option to sell
@nkmile64 said:
Did anyone manage the VaR question? It asked the confidence interval for the final outcome not to be negative, which means we first had to find the probability of the outcome being between 0 and the mean of 6.5. With a std. deviation of 1.3, the std. variable isz = (x-m)/s =(0-6.5)/1.3 = 5
However, the Tables provided in the exam stop at std. variable 3!. Does anyone have a solution for this?
I made the assumption that , the confidence level in which the NPV will be 0. So the maximum loss will be the current NPV of 6.5m
then we need to amend the VAR Formula to:
6.5m = K (1.3m)(Squareroot of the project duration) was it 7 years? sorry cant recall.
you should get the K equals to 1.88/1.89, if u refer back to the SD table, that will gives u between 0.4699 and 0.4706You could do the exact and get the value, but due to time constrain, i had to do it quick and assume its a rounded up 0.47 (probably lose some marks). Referring back to the normal bell curve, u will need to +0.5 to it, which gives u 0.97 (97% confidence level)
Sorry, i only rmb how it should be done, i am not competent enough to explain why we do it like this.
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Did the same thing for Q1 and Q2 same answer.. Did not get enough time for Q3 just answered 5 marks. Crossing figures that just get 50 out of 75-80.. But seems quite difficult. Am afraid might fail marginally …
Any one did question 4. Didn’t find any comment on qus 4. Was it simple evaluation with some normal inc dec calculation ?? I did it in this way.
Re discount rate to be used in NPV – I had a thought last night re the 5%. Given that the WB was involved I think it was to be treated as an under developed country and therefore to use the 13% given was incorrect as it wouldn’t take account of the risk involved. I now think it should have been 13% + (5% – T).
did any one try number Qn 4 what did they actually what?
a struggling company with many department (nation, local,staple etc) that it wanted to dispose off, offers made using net assets method, then FCF Qn was confusing
I’ll try) On the whole: Number 1: APV for international project (translation from its currency and etc.) Maybe a little unusual because cost of capital was given, APV to guess. Number 2: a) classical interest rate risk (forward, futures, options), to calculate net costs of borrowing and effective interest for each. Number 3: M&A: calculate gearing and EP for three options of payment (by shares, by cash, by shares 60% and by cash 40%)
@manulik8 said:
Q1 Fair and time pressured, used APV.
Q2 FRA 4.25+0.5=4.75%
Futures 4.8%
Option 4.91 and do not remember.
Q3 was disaster !!!Mariam, as be advised by John, the FRA should be incorporates the credit spread already, therefore the FRA should be 4.25% only
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Question 1 and 2 were fair but question 3&4 were not clear. i couldn’t really tell what the examiner was requiring but all hope is not lost
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Do these people ever listen to us when raising concerns?
If so, i suppose they should understand the issue of “TIME”, SPECIFICALLY FOR THIS exam that we just wrote.
I therefore make a plea to them to consider it when marking. That question paper was just “TOO MUCH” for 3 hours@nkmile64 said:
Did anyone manage the VaR question? It asked the confidence interval for the final outcome not to be negative, which means we first had to find the probability of the outcome being between 0 and the mean of 6.5. With a std. deviation of 1.3, the std. variable isz = (x-m)/s =(0-6.5)/1.3 = 5
However, the Tables provided in the exam stop at std. variable 3!. Does anyone have a solution for this?
You did the same as I did in the exam… the $6.5m NPV was for the whole project life, so didn’t need to times that by the 7 years, just needed to do the square root of 7 x 1.3^2 and divide $6.5m by the answer to give the number of standard deviations (approx 3.44) 6.5/3.44= 1.89 in the table – which is 0.4706. Add 50% to give 97.06% confident cashflows won’t be negative.
I’m kicking myself now as it was 4 easy marks wasted.
I think time management could be part of the exam. Imagine you are a financial analyst working under pressure to complete an assignment within a very tight deadline! Otherwise i would also wish for more time.
@ineves said:
Finance effect cant be annuity because it has to be translated into USD first at different exchange rates before discounting so will result in different cashflows each yearI’m pretty sure the loan was already in USD (given by the “world bank”) so you use the 13% (risk adjusted, 100% equity financed) rate to discount the cash flows and then worked out the financing side effects of the loan.
Before that I worked out the cash flows in the foreign currency, converted these into USD using the relevant exchange rate, then added the income in USD from the parts sold to the subsidiary (post US tax). I think the question said something about the tax being mutually exclusive, i.e. once you’ve paid tax in one country you don’t have to pay it in the other, despite the different rates.
What did people use for the loan amount? I remember the bank saying that they’d fully fund the land, plant & machinery costs so I used the total of that + the initial working capital.
Wasn’t too sure what to write for the part regarding the “business risk” either!
Hi Tim,
Loan was in $, I think we wanted to get 1200M plus 230M dinars. However payable immediately and 40% at the Beg of year 2. I guess we had to recalculate the whole amount to $ and then calculate financial effects.Oh no! I missed completely the fact that the std. dev. was on an annual basis! I just hope that these 4 (?) marks don’t make the difference between a pass and a fail.
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@nkmile64 said:
Oh no! I missed completely the fact that the std. dev. was on an annual basis! I just hope that these 4 (?) marks don’t make the difference between a pass and a fail.he will give u marks for your workings and explanations..you’ll be fine mate….
How do the ACCA decide which questions to include in the hybrid paper?!
Of the 4 questions, 3, including Q1, are from the March 2016 paper, and only 1 optional question is included from the June 2016 paper.This is just stupid.
It should be Q1 + 1 option from one paper and 2 options from the other paper. This makes 75 marks from one paper and 50 marks from the other.Ridiculous ACCA.
can any one suggest me how to manage the time in optional papers…because i only attempted 75% P4 paper even i can further 25% paper but couldn’t due to time off.
@junaid100 said:
can any one suggest me how to manage the time in optional papers…because i only attempted 75% P4 paper even i can further 25% paper but couldn’t due to time off.Hello Junaid,
It seems obvious, but the only real way to manage time is to practise, practise, practise exam questions until you are able to complete them within the 90 / 45 minute limit.
However, if you are completely unable to do that, then my advice is to not go over that time limit. If you can only complete 40-45 marks (of Q1) within 90 minutes, then stop and move on to the other questions. Its better to sacrifice the 10-5 marks and go for the other 50 marks, than to spend even an extra 5 minutes on those 10-5 marks, and potentially lose out on more marks elsewhere because you ran out of time.In the exam on Friday, I overran by just 5 minutes on Q2 (1st question I attempted), and it caught me out at the end, and I was unable to catch up the time and finish Q3.
Hope that helps, and if you took an exam last week, hope you get 50+!
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