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Not Understood 4Th Point
AFM
answered on 25-Jan-24 17:08
Sir,I Not understood point in question '' standard deviation and co-efficient of varaiation assuming that there are only three streams of cash flow,which are represented by each column of the table with given probabilty Could u please explain y we took NPV as cash flow to compute variance
latest answer
OK sir I Will listen to that
Surya Prakash
CA Final
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504
Method to Follow in Exam
AFM
answered on 24-Jan-24 07:43
Sir, Which is the best method to follow in exam? Method:1=Discounting Nominal Cash Flows with adding inflation Method:2=Discounting real cash flows with real rate
latest answer
OK sir
Surya Prakash
CA Final
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472
Discounting Rate
AFM
answered on 23-Jan-24 10:55
[Timestamp @ 10:12] Sir, are there any cases where the yield of one bond in the portfolio differs from that of the other bond? If such cases exist, then which discount rate (i.e., the yield of which bond in the portfolio) has to be chosen to arrive at the PV of the investment? Thank you.
latest answer
Yields differ because of maturity and credit rating. In all our problems we usually assume credit rating is same. You should choose the yield a bond whose maturity is same as investment , as discount rate for investment
Denz Philip
CA Final
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Beta
AFM
answered on 22-Jan-24 18:24
What is the difference between leveraged beta & unleveraged beta? Whether asset beta & leveraged beta are same? Also how to identify in the question that the beta of debt be zero?
latest answer
The inclusion of debt beta in the computation of the asset beta is to account for the financial risk that the debt adds to the firm's equity. The formula you've shown adjusts the equity beta for the effect of financial leverage (debt). Here's the reasoning: equity Beta : This is a measure of the risk of a company's equity relative to the market. It is "leveraged" because it reflects not just the business risk but also the financial risk due to the company’s debt. Debt Beta :This represents the risk of the company's debt also relative to the market. Generally, the debt of a company has some risk (though it's usually quite low compared to equity), especially if the interest rates are variable or the company's ability to meet its debt obligations is uncertain. Asset Beta : This is the unleveraged beta, reflecting the company's business risk without the effect of its capital structure. It is what the company's equity beta would be if it had no debt. When you adjust the equity beta for the impact of debt, you essentially strip out the financial risk to get the pure business risk (asset beta). Even though the debt beta is often low, especially for stable companies, it's not zero because debt holders require a risk premium above the risk-free rate, albeit much smaller than equity holders. Therefore, the formula provides a way to calculate the asset beta by considering both the equity beta and the proportion of debt adjusted for tax benefits, along with the debt beta to reflect the small amount of market risk associated with the company's debt. The tax shield (D(1-t)) is included because debt interest is tax-deductible, reducing the cost of debt and thus affecting the overall cost of capital.
VISAAGAN R
CA Final
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898
Adjusted present value model
AFM
answered on 22-Jan-24 14:49
Why can we do levered firm value - expe Ted bankruptcy cost.
latest answer
Right
Hrishikesh Pradhan
Qualified CA
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Doubt Regarding Profit
AFM
answered on 22-Jan-24 14:16
Dear Sir, When we have Pounds 62500 and when we sell the pounds for dollars it would be $ 80100 (USD) and now we purchase back Pounds @ 1.2806 that would be 62548.80 Pounds with a gain of 48 pounds. Is this conceptually incorrect?
latest answer
Markets are not always efficient - there may always be pockets of inefficiency. However, with advent of technology and algo trading, all such inefficiencies are exploited immediately if any and no such aribtarge opportunities openly exist in today's world
Vanacharla Sai Pavan Kumar
CA Final
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RISK MANAGEMENT - VAR (value At Risk)
AFM
answered on 04-Sep-26 15:30
The VAR concept wasn't explained in full. There was a issue in Video, It seems that the video had been cut at some point.
latest answer
We will talk of negative side only
Tharani Priya J
CA Final
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Due Deligence
AFM
answered on 21-Jan-24 19:56
Sir What is mean by due deligence in AFM
latest answer
Thanks sir
Surya Prakash
CA Final
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484
Link Between Interest Rate and Exchange rate Depreciation
AFM
answered on 22-Jan-24 14:14
Sir, Why the Rupee Depreciates when the Interest rates of India are higher than in the US was not explained. An example was given but when we see the Japanese Yen which has depreciated close to 83% in the past 12 years when their Interest rates were negative in the past 12 years which was nearly less than US Interest rates.
latest answer
You can if you are interested. Pls go through course guides on our website https://www.indigolearn.com/exam/CA-Course-Guide-Here-Is-How-To-Become-a-CA
Vanacharla Sai Pavan Kumar
CA Final
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Advance cap bud - ill 18
AFM
answered on 20-Jan-24 21:07
Didnt understatnd the logic of adj with cost of capital 6% as (1/(1.06)^2,(1/(1.06)^4,(1/(1.06)^6),
latest answer
It is known as hiller's method. Have not seen it being used anywhere practically. For icai exam purpose our explanation is sufficient - from a real world perspective not really sure if it is useful at all
Devika Viswanathan
CA Final
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