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Capitalization rate

AFM

answered on 04-Mar-25 07:33

Capitalization rate will be used to determine market value of company.But here why it is used to determine eps?What is the relationship between market cap rate and eps?

latest answer

EPS / Cap rate = MPS => MPS x cap = EPS

Bhoomesh Velan

Bhoomesh Velan

CA Final

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306

Cross rate

AFM

answered on 04-Mar-25 07:47

Sir, I tried to do one by myself, but I think something is getting wrong as my answer does not matches with website , site variance, however I tried to solve logically, if I have done anything wrong, kindly tell what got wrong

latest answer

Your method is correct - no mistake. What happens in Oanda or any other site is when you are taking data, from the time you move from one screen to another for diff currency rates, the market quotes change look at all quotes at same time on a single screen and it will be proper with possible variation in 4th decimal. check screenshot and working below

Hrishikesh Pradhan

Hrishikesh Pradhan

Qualified CA

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306

Existing shareholder's wealth in case of rights issue

AFM

answered on 03-Mar-25 20:13

Sir, why did you add 150 crs of subs amt to the shareholder's wealth when the company will get the amount of subs only post issue of rights??

latest answer

1 Shareholder wealth = market cap / share count When share count is added (i.e denominator) the money received from those shareholders is also invested in a project and the project has a PV that PV is added to numerator

Pradeepa Narayanan

Pradeepa Narayanan

CA Final

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250

Illustration 21 - Options

AFM

answered on 01-Mar-25 15:52

In exam will they give the distribution table or the values of N(d1) and N(d2)? If they didn't give is there any alternative way to compute like Log value?

latest answer

They will give U cannot compute them Ona. Normal claculator

Sasi Sekhar

Sasi Sekhar

CA Final

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234

Discounting rate

AFM

answered on 01-Mar-25 18:23

Sir, could you please the explain the ideology behind taking post tax rate an₫ further, in the end portion of the video where the you are saying coupons are pre tax and post tax need to be applied for discounting... whats the reason behind that too. sir

latest answer

Tax

Abhinav K A

Abhinav K A

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323

SCRAP

AFM

answered on 28-Feb-25 20:14

Sir, in this q, why r we not considering tax savings on profit from sale of scrap,ie 50000*0.4?

latest answer

I which option any time stamp reference?

SANSKRITI BADRI 2111339

SANSKRITI BADRI 2111339

CA Final

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273

Increase in working capital

AFM

answered on 26-Feb-25 15:41

sir, why the short term debt is excluded from the calculation of increase in working capital

latest answer

In FM, ST debt is not treated as part of WC. Debt is treated independently and not mixed with WC ignore the FR definition of CL which includes current maturities of LT loans and ST Loans

Abhinav K A

Abhinav K A

CA Final

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307

Doubt regarding calculating YTM

AFM

answered on 25-Feb-25 19:14

Sir, In the question, it is stated that the interest on debentures is paid semi-annually at 14% for a ₹100 bond over a period of 5 years. However, the interest for the first 3 years is paid in advance, and the balance for the remaining 2 years is paid at the end of the third year. My doubt is: while calculating the YTM, should the interest be shown for each year and multiplied by the PVIF, or should it be considered only on the actual dates of interest payment? like Time 0: ₹42 (interest for 3 years paid in advance) End of year 3 (6th period): ₹28 (remaining interest for 2 years) End of year 5 (10th period): ₹100 (principal repayment)

latest answer

Thank you, Sir, for clarifying my doubt.

Mano

Mano

CA Final

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326

Portfolio Mgmt- Dividend yield

AFM

answered on 24-Feb-25 14:10

On what should we calculate dividend yield % based on current year market price or previous year price (investment) In Q15, dividend yield is calculated on PY price whereas in Q45, it is calculated on CY Price. Please suggest which one should be preferable in the exam.. To elaborate In Q15, for Krishna Limited we took 22/245 (PY stock price) for dividend yield in year 2012-13 whereas in Q45, while computing dividend yield we took 8.5/147(CY price) for year 2009-10.

latest answer

I have changed the solution after acai New Material came out and i had revised the solution in 2024. I have updated the video and also updated the PDF notes on this .In the introduction chapter i also have a spreadsheet titled " List of updated/corrected videos for minor errors"- in that also i highlighted the change in solution for Q 45 in PM chapter. These updates are available in book we printed late last year but are available on our PDF version of the notes which is available in the intro chapter for all enrolled students In both cases the yield has to be computed on PY value only like in Q 15

Raviteja Kusumanchi

Raviteja Kusumanchi

Qualified CA

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278

Number of days

AFM

answered on 23-Feb-25 20:10

In this question, if we calculate number of days as 59 (31+28) then what to do at exam hall, will we calculate e using calci.

latest answer

They will give value of e power (days x time) Very unlikely they will not give e power value. I have not seen ICAI not giving the value in last 4-5 papers Using that u can figure which number of days to consider

Hrishikesh Pradhan

Hrishikesh Pradhan

Qualified CA

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308