P4 REVISION QUESTIOIN — OpenTuition Forums

3310zcx11y ago

HI, John I have a question on valuing company using BSOP model. how to identify the 'current price' and Exercise price in this model. in the past papers (JUNE 10 Q2), there is only one question about this topic, and the PS=ASSETS-CURRENT LIABILITY, exercise price= present value of the debt with zero coupon rate in the examiner answers. I want to know, if in the exams , how does the examiner will explain the PS and X. in a simple way, how to identify both two factors quickly? thanks so much!

John MoffatTutor11y ago#1

This question was set by the previous examiner (and he always managed to make things seem very complicated). The current examiner started with the December 2010 exam, and if he does decide to ask BSOP for valuing a company then I think he will make is pretty clear what figures to use for Pa and Pe. I can't really say more than that.

3310zcx11y ago#2

Thanks. John

John MoffatTutor11y ago#3

You are welcome :-)