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IRRM - hedging through cap
AFM
answered on 24-Jan-25 08:31
In ILL 13, loan period = 24 months (6 months LIBOR i.e. 4 periods). Reset reset is given for upcoming 3 periods. Option Premium = Rs. 1,50,000 PVAF of premium (3.5%, 4 period) calculated = 40,837. Why 4 periods is considered for discounting? Is it arrived assuming that the cap is purchased before the first period, and that the net effect of interest rate risk heading is specifically asked over the given three periods, excluding the first? Can we solve it making note that cap is bought on 1st period and duration of cap = 18 months (3 periods). PVAF of premium = 150000/PVAF(3.5%, 3 periods) = 53540
latest answer
Thankyou sir
Durai Murugan
CA Final
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336
Theoretical value of futures
AFM
answered on 24-Jan-25 07:19
sir when they ask theoretical value of futures, should we do conclude with 20,000 as answer or 20000*50 = 10 lakhs (considerinng the lot size as well)
latest answer
They are asking for single unit and not full lot
Hemachandra D
CA Final
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304
Fixed Intial and Maintaince Margin
AFM
answered on 24-Jan-25 07:18
In this question unlike other examples where Required margin will be applied as % on daily closing levels, in this case its a problem considering the meam=n + SD, so the Margin is fixed level Right ?
latest answer
Mean and sad keep chafing as days go by Typically there margin levels are changed once a month /2 when there is low volatility If volatility is high exchanges can change is for lower frequency also
Hemachandra D
CA Final
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1
318
EQ VALUATION
AFM
answered on 24-Jan-25 08:49
WHAT IS NON CASH CHANGE IN WORKING CAPITAL TREATMENT IN FCFF ?
latest answer
Sure
manjay tiwari
CA Final
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295
Alternative for portfolio beta after months
AFM
answered on 20-Mar-25 06:16
Sir portfolio Beta after 4 Months we can also do using wegithed beta formula right ? excluding the Nifty Futres contract value in the denominator, (117.84*1.4 + 10 *0 + 128.3286*1)/127.84
latest answer
Depends on question Weighted method more preferable usually But in some questions when that data is unavailable you use the other method
Hemachandra D
CA Final
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3
274
security valuation (equity)
AFM
answered on 23-Jan-25 21:39
is enterprise value affected by DEPRICIATION POLICY
latest answer
No
manjay tiwari
CA Final
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1
274
When we have already found the weight as 0.2 and 0.8, why are we finding correct weight?
AFM
answered on 23-Jan-25 21:38
When we have already found the weight as 0.2 and 0.8, why are we finding correct weight? What does it mean and what is the difference between both the weights?
latest answer
Becuase .2 & .8 are book value weights and we are trying to find out market value weights
Manu Jacob
CA Final
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356
Debt and Euity Market
AFM
answered on 23-Jan-25 18:46
Sir you Said In India we Borrow from Banks and NBFC Largely and on the other hand you are saying the Equity MARKET IS LARGE IN India as Compared to debt Market Can you please elaborate a little bit
latest answer
we all invest in shares but do not invest significantly in debt offerrings Corporate Debt market is undeveloped as we have poor bankruptcy procedures ( it takes years together) and debt guys like to get back money if biz shuts down. They have lower risk appetite than eq guys Becuase eq is highest end of risk we invest in it a lower risk instrument like debt req better systems which we do not have
Gauri Shete
CA Final
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298
Perfect Hedge
AFM
answered on 24-Jan-25 07:16
Sir when we do perfect Heding we end up in a situation No net gain/loss, so in this case when the Index becomes 27000, then Gain from futures is 9,69,750 as calulated in the solution, and the loss on the value of poroflio shares will be 6060000 * 15%(10%down *1.5 beta) = 9,09,000 So, Gain in futures by Rs 9,69,750 Loss in Portfolio shares by Rs 9,09,000 So why this difference ?, how to interpret this difference
latest answer
In this question basis risk arises on account of hedging instrument maturity and hedging duration being diff If u use same maturity instrument u will not have any diff In some cases it is because of rounding off
Hemachandra D
CA Final
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3
369
Open ended
AFM
answered on 23-Jan-25 14:38
Are all investments in Open ended unlisted securities as they are not listed on Stock exchange. That means all SIPs are unlisted securities?? Don't they invest in listed securities??
latest answer
They invested in listed securities but their NAV is not shown on stock exchange but they compute & upload their NAV on their website, AMFI website and when we all trade, that NAV which is disclosed on website
Veena Avusula
CA Final
★ 1K+
1
275