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Hello sir,
In doing the Levante Co question,the examiner states
“extracts are provided on the current government bond yield curve and yield spreads for the sector Levante Co opera……”
Since the word spot has not been mentioned anywhere in question, I assumed the yields given were YTMs and not spot rates, which of course turned out to be wrong.
So, how can i be sure the figures given in an exam are spots and not YTMs of a government bond.
This is really confusing me since in the 30.Airline Business(12/07 BPP) question they have stated
“the current yield curve suggests that, at three years, government treasuries yield 3.5% and at four years they yield 5.1%” and have gone on to use them as the YTMs rather than the spot.
Thanks for all your hard work. Really grateful for this site. Cheers.
Please tell me which exam Levante was in.
(I cannot remember the names of every question in every exam 🙂 )
You assume they are spot rates unless obviously you are told different.
Have soured the technical article on this on the ACCA website?
Most importantly, if you are unsure in the middle of the exam always (whatever the question is about) state your assumptions. Even if you have assumed something wrongly, you will still get credit for what you have done.
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