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Derivatives
AFM
answered on 31-Mar-24 16:57
Hello Sir, Please correct me if I am wrong, Gain or loss is always calculated on forward prices, But In this problem (part b), If instead of 28 day e value, if 62 days e value was given, then we would have compared 90 Day forward price (2303.6484) with 62 day forward price and calculated the gain. Since we are given e value for 28 days, we are comparing Spot on 28th day vs Forward price for 28 days and the calculated 90 day forward price becomes irrelevant?
latest answer
Understood sir, thank you so much!
Susee Arunachalam
Qualified CA
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387
Beta calculation
AFM
answered on 31-Mar-24 06:28
What if the company's whose valuation we are doing is not listed and is a private limited ?
latest answer
In a market if i can trade a security the price will be fair. If the security cannot be traded ( eq share of a pvt ltd co.) market price will be less than fair value because someone who buys from you also may not be able to sell it again s0 the security is usually sold at a discount - this is called liq discount
Hrishikesh Pradhan
Qualified CA
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Rm calculation
AFM
answered on 30-Mar-24 19:43
Sir , for example I am doing a valuation of a company who is first commer meaning that there is either no market or similar company is not listed. Then how will we get market return
latest answer
Ok sir got it
Hrishikesh Pradhan
Qualified CA
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2
493
Doubt Regarding P/E ratio Change
AFM
answered on 30-Mar-24 19:24
Sir, you're mentioning in this particular question no change in P/E ratio but in fact the P/E ratio has fallen below 15 Because of no change in market price per share and post-merger EPS has increased per share.
latest answer
What I meant was The PE of whole entity is not PE of acquirer
Vanacharla Sai Pavan Kumar
CA Final
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1
356
Spot rate and forward rate
AFM
answered on 30-Mar-24 04:30
Why are we considering the forward rate or spot rate from one bond to calculate the forward rates of another bond sir? Like, it is different from each other and even coupon rates also different. Could you please explain sir?
latest answer
Generally for companies of same credit rating, the cost of borrowing is same if tenure and amount are same
Hanumanthu Rajesh
CA Final
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401
FOREX
AFM
answered on 29-Mar-24 09:19
Sir, in Q 33 here the dominating currency for AUD USD is USD so would not the bank buy USD at cheap and sell USD at high price, and also the bank is at Sydney thereby USD becomes base currency so banker bids to buy base ie USD at 0.7100 instead of 0.7300?
latest answer
You said USD is stronger currency and AUD weaker currency - that is right. so in 0.71/0.73 Base currency is AUD It gives No of USD per AUD... Quote is AUDUSD (in USDINR 83/83.5- base currency is USD i.e No of INR per USD) So when we want to buy 1 AUD i.e bank will sell 1 AUD ( base currency) they will ask 0.73 USD and when we want to sell AUD i.e they want to buy 1 AUD they will give us 0.71 USD
Venky Balamurali
Qualified CA
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1
280
maturity (iv)
AFM
answered on 29-Mar-24 09:23
why 10 years and not 20 since it semi annually (iv)
latest answer
It is a 5 year bond so 10 periods. Discount rate is 4% and periods are 10
Devika Viswanathan
CA Final
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1
242
calculating npv
AFM
answered on 29-Mar-24 09:24
why market value is used to calculate npv? not the issue price
latest answer
In Bonds Market price is always used to calculate the YTM and not the issue price Thinks are always looked at from perspective of a new investor. Pls forget what you studied in CA inter if at all that is confusing you
Devika Viswanathan
CA Final
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1
222
Illustration 4
AFM
answered on 29-Mar-24 09:25
case 1 - why 5th year 110 is taken - 1 to 5 already 10 taken
latest answer
First 10 is annual coupon and 110 is redemption value
Devika Viswanathan
CA Final
★ 9K+
1
280
Equity multiplier formula
AFM
answered on 29-Mar-24 03:09
What is formula for Equity multiplier? =Total Assets/Equity or =Equity/Total Assets
latest answer
Total asset/total equity
Ranjith Shettigar
CA Final
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562