Sfm today paper

The paper was easy

Please describe about Chapters Q tricks etc.

are Q from RTPs and PM.

tough paper no questions from leasing, capital budgeting. ... paper is full of m&a, valuation of business

Ok... and RTP & PM Role in today paper.
Aisa feel ho raha hai insti kuch particular topic pe focus kar rahi h na ki whole syllabus ko touch karne ki.

May God fulfil all ur wishes Dear

Ma frnds also say Easy.

step marking hoti hai kya sfm mai?

any one plzzz tell dat in Q 2a whether defered tax asset is to be taken or not in net assets.

& in interest coverage ratio whether working capital loan is to be taen or not.?????????????

I think workin cap loan ws to be taken for interest coverage bcoz it is also an obligation to be paid by the entity.. and ya i did a few sums where DTA is considered for Net Assets.. since tax benefits are tranfered to the merged entity... i did it lyk dat..  lets c..

soothing wrds ....sfm paper was easy ..

in last attempt, sfm was bit tough ...

let's see how it goes in our attempt

thnx pranita,   i hav also same opinion n do that in exam bt not very sure, well hope it will b right 

agar right hua to maja aa jaega.......

hey guy,

some solution of some particular ques on SFM. This is only one of possible soln, there can be other possible solution also. since i Handle forex and treasury product in my job i tried to solve this question

1 a)  Walters model

      P= D+ (E-D) r/ke

                   Ke

          = 1.5 + (6-1.5)0.20/0.10

                   0.10

          =105

1b) Current price = Face value x (1- D x days to maturity)

                                                                         360

                             = 100 x (1- 0.08 x 90/360)

                             = 100 x (1- 0.02)

                             = 98

       Bond Equivalent yield = Face value- current price      x 360     

                                                     Current price                    Maturity period

                                           =  (100-98 )/98  x 360/90

                                            = 8.16%

Or

                 =               Discount rate            .

                           1- (Disc. Rate x days to maturity)

                                                          360

                 =                 0.08                

1- (0.08 x 90/360)

= 0.08/0.98

= 8.16%

1d)

i) since the base currency (USD) interest rate is lower than variable currency(INR) the Base Currency( USD) should always command premium over Variable currency(INR). So US Dollar will be at premium in Indian Forex Market.

 ii) F   = (1+rv)                   F is the forward rate and S is the spot rate  rv = Interest rate               

     S       (1+rb)                    of variable currency, rb=Interest rate of base currency

      F   =  (1+0.10 x 6/12)                   

     55.50 (1+0.04 x 6/12)          

               F   =  (1.05)                   

              55.50  (1.02) 

    Forward rate  for 6 month is 57.13

Premia % =        =      F – S  x 12 x 100

                                        S          n 

                          =    (57.13 -55.50)/55.50   x 12/6 x  100

                          = 5.87%

3a) 

1. expected price after 4 month  Rs. 160.50
2.  if u read the question it has  given Value of call   if  exercise price prevail  and not expected price at the end of 4 months so if at the end of 4th month the  price of  asset is equivalent to exercise price of 150 then the value of call will be  zero.( if the spot price will be 150 then it will equal to exercise price then the value of call is nil as the buyer will be indifferent). if the question would have specified exercise price prevails then the answer would have been different.. There may be other way of interpreting this question too.
3. If option is held till maturity expected value of call is 14

3b)  option of paying in 60 days

          Outflow ($ 2000000 x 57.10)                                         114,200,000.00

      Option of paying in 90 days

1. if additional credit of 30 days  taken from supplier

outflow for invoice                 2000000.00

outflow for interest

($2000000 x 0.08 x 30/360*)    13333.33

Total outflow                       $2013333.33 x 57.50           115,766,666.48

2. If loan is taken from banker for 30 days

Outflow at 60^th day

 $2000000 x 57.10 =                114,200,000

Interest for 30 days

(114200000 x 0.10x 30/365*)          938630                115,138,630.00

(payment will be paid to supplier on 60^th day by taking loan from bank)

Option of paying on 60^th day is definitely better, but if the Z Ltd. does

not have own fund to remit  USD to supplier on 60^th day and have to

decide whether to take Bank loan or suppliers credit for another 30 days

then  option of taking bank loan is better as outflow is less

* basis for calculating interest in USD is 30/360 and in INR is 30/365)