ACCA P4 Advanced Financial Management Practice And Revision Kit 1st Edition BPP Learning Media - Solutions

Discover the ultimate resource for mastering ACCA P4 Advanced Financial Management with our comprehensive practice and revision kit. Access online solutions and answers key to enhance your understanding. Our expertly crafted solution manual provides clear, step-by-step answers to solved problems, ensuring you grasp every concept. Dive into our extensive test bank, featuring detailed questions and answers, perfect for exam preparation. With chapter solutions and an instructor manual, this textbook offers everything you need to succeed. Enjoy free download options for solutions PDF, and unlock the full potential of your financial management studies today!

Under the terms of a swap arrangement, Louie has paid interest at 10%, Dewie at LIBOR  1%.The parties have swapped floating rate interest at LIBOR  1%. What amount of fixed rate interest do they need to swap for Louie to end up paying net interest of LIBOR – 0.5%?
Give three uses of an interest rate swap.
What happens if one party to a interest rate swap defaults on the arrangements to pay interest?
What aspect of the valuation of an option does the standard deviation measure?A Asset price C Volatility of asset value B Exercise price D Time to expiration
Fill in the blanks.With a collar, the borrower buys …………………. and at the same time sells …………………. .
Fill in the blanks.If a company wishes to hedge borrowing at a future date, it should purchase. ........................................ options; if it wishes to hedge lending, it should purchase........................................ options.
What are 'FRAs'?
Identify three aspects of a debt in which a company may be exposed to risk from interest rate movements.
Thalmes Inc is a multinational company that has a bid on a project funded by the Slovenian Government. If the company succeeds in its bid it will have to invest €2,000,000. The decision will be announced three months from now. The management of Thalmes is afraid that dollar devaluation will
Trebzon Ltd, a UK company, plans to use a money market hedge to hedge its payment of €4,000,000 for Spanish goods in one year. The UK interest rate is 6% and the euro interest rate is 4%. The spot exchange rate is €1.46 = £1. Determine the amount of £ needed if a money market hedge is used.
Swaps, like other derivatives, can be used as methods of speculation.True False
Fill in the blank......................................... risk is the risk of one party on a swap defaulting on the arrangement.
What are the main factors affecting the level of option premiums?
What is the significance of a settlement date in futures?
What are the key stages in setting up an option hedge?
Complete the following table using buy or sell.Transaction on future date Now Option on future date Receive currency Pay currency
Complete the following table using buy or sell.Transaction on future date Now On future date Receive currency currency futures currency futures Pay currency currency futures currency futures
Fill in the blanks.(a) Forward rate cheaper than spot rate quoted at a ........................................(b) Forward rate more expensive than spot rate quoted at a ........................................
Fill in the boxes in the diagram with (A) to (E), to indicate which factors are linked by which theory.(A) Purchasing power parity theory(B) Expectations theory(C) Fisher effect(D) International Fisher effect(E) Interest rate parity Difference in interest rates (2) Difference between forward/spot
Which factors influence the supply and demand for currencies?
A US exporter receives HK$400,000 from a customer. The bank has quoted an offer price of HK$7.7000 and a bid price of HK$7.7425. How many US dollars will the exporter receive from the bank in exchange for HK$400,000?
Give three possible advantages of decentralisation of the treasury function.
Fill in the blanks in the statements below, using the words in the box. (Words may be used more than once.) Treasury management may be defined as 'the corporate handling of all (1) ..................................matters, the generation of external and internal (2)
A 91-day T-bill with a face value of $10,000,000 is issued for $9,830,000. What is the discount rate?
What is an MBI?
Give four examples of possible exit strategies for a venture capitalist.
Name three factors that an institutional investor will consider when deciding whether to invest in an MBO.
Fill in the blank.In a ........................................ , a new company is created whose shares are owned by the shareholders of the old company.
Fill in the blank.A ........................................ involves the sale of part of a company to a third party.
Fill in the blank.A ........................................ is a splitting up of a corporate body into two independent bodies.
Give five advantages of a public company going private.
Describe the procedures that should be followed when designing a financial reconstruction scheme.
Yellow Company has plans to acquire Brown Company by exchanging stock. Yellow will issue two shares of its stock for each share of Brown. Financial information for the two companies is as follows.Yellow Brown Net income 500 200 Shares outstanding 300 50 EPS $ 2.5 3.8 Market price of stock 38 50
What are the main factors the shareholders of a target company need to consider in order to decide between a cash and a paper offer?
What are the main factors a bidding company needs to consider in order to decide between a paper and a cash offer?
What are the main defensive tactics in a takeover?
Which mergers fall within the jurisdiction of the European Union?
What are the key points of the takeover regulation?
What are the two models of takeover regulation?
What is the most appropriate method for the valuation of an acquisition that changes financial risk?
What are the three mark-based approaches to valuation?
If the return on equity is 12% and the retention rate is 0.4, what is the estimated growth rate of dividends?
What is the relationship between earnings growth and retained profits?
Give three ways in which the growth rate of a firm's dividendss can be estimated.
What are the main disadvantages of mergers as an expansion strategy?
What are the main advantages of mergers as an expansion strategy?
What are the sources of financial synergy?
Provide three explanations for the failure of acquisitions to enhance shareholder value.
State at least five criteria for choosing an appropriate target.
Give four examples of ways companies can overcome exchange controls.
By what methods do governments impose exchange controls?
Give three factors that might influence the choice of finance for an overseas subsidiary.
Give three reasons why a multinational might establish an overseas subsidiary.
Give four examples of ways in which a company could hedge economic exposure.
What are the implications of the following on the potential purchasing power of the dollar?(a) High $ interest rate(b) High $ inflation rate
What is the difference between transaction and translation exposure?
What is the impact of exchange controls on the decisions to invest in an international project?
What are the two ways NPV can be calculated for an overseas project?
Using the data in question 2, how can you profit?
Suppose that the annual interest rate is 5% in the US and 6% in the UK, and that the spot exchange rate is£1 = $1.756 and the forward exchange rate, with one-year maturity, is £1 = $1.749. Does interest rate parity hold?
What does the absolute purchasing parity relationship state?
A company has assets with a market value of $500,000, and 2-year debt with a face value of $280,000.The risk-free rate is 3% and the volatility of asset value is 35%. Find the value of the default probability using the Black-Scholes model.
Using the information above and assuming the free cash flow is expected to grow at a constant rate of 3%per year, what is the valuation of XYZ Co?
Using the information above, what is the FCFE using the indirect method of calculation?
The following information is available for XYZ Co.Capital expenditure $50 million Corporate tax rate 25%Debt repayment $27 million Depreciation charges $13 million Shareholders' required return 13%20X8$m Sales 725.00 Less cost of goods sold (517.00)Gross profit 208.00 Operating expenses (91.75)EBIT
What will happen to the value of a corporate bond if its credit rating is downgraded?
What is the most likely rating next year of a BBB bond?
What is the relationship between credit rating and the cost of debt capital?
You have invested in a bond with a default probability of 10%. In the event of default you hold collateral that amounts to about 70% of the value of the bond. What is your expected loss?
Using the beta values for the following companies, calculate the cost of equity if the market risk premium is 5% and the return on a risk-free investment is 4%.Company Beta(as at November 2015)GlaxoSmithKline 0.87 Volkswagen 1.41
months if the price and volatility of the underlying remain unchanged?
You have bought an OTM call option, with an exercise price of $40. The option cost $2 and it expires in 6 months. What would you expect the value of the call option to be in
You have bought a put option, which expires in three months. The day after you bought the put option, the volatility of the underlying asset increased. What would happen to the value of the put option?
A call option with an exercise price of $60 is bought for $3. On expiry day the underlying is $61. Should the call option be exercised?
What is the advantage of the Monte Carlo calculation of the NPV?
If Project A had a duration of 3.5 years and Project B had a duration of 2.6 years, which project would be preferable and why?
What is the main difference between MIRR and IRR?
What is the appropriate criterion for ranking projects when there is a constraint of funds?
When does the multiple value IRR normally occur?
Why is NPV preferable to IRR as a project selection criterion?
(a) Financing factors(b) Tax factors(c) Managerial factors(d) Timing factors
Comparable uncontrolled price (CUP)Cost plus (C+)Resale price (RP)Profit split (PS)
Transfer price manipulation is the use of transfer prices to avoid the payment of taxes or tariffs.
A contractual joint venture is for a fixed period; duties and responsibilities are defined in a contract.A joint-equity venture involves investment, is of no fixed duration and continually evolves.
(a) More favourable tax (not subject to withholding tax)(b) Fewer legal formalities
(a) Tax on foreign investment or sales income earned by resident companies, and withholding tax on dividends paid to parent should be low(b) Stable government and stable currency(c) Adequate financial service support facilities
Any three of: Product differentiation barriers; Absolute cost barriers; Economy of scale barriers; Fixed costs; Legal barriers 2 True
By what methods do governments try to combat money laundering?
How do deflationary measures help to eliminate a balance of payments deficit?
What is meant by:(a) A free trade area?(b) A customs union?(c) A common market?
What is meant by the law of comparative advantage?
Define a multinational enterprise.
Give two examples of triple bottom line indicators for each of the following impacts of doing business.(a) Economic(b) Social(c) Environmental
What are the main elements through which the ethical responsibility of a company is discharged?
What are the main elements of an ethical financial policy?
List two areas of a company's activity where ethical issues may arise.
On what management objective is the theory of company finance primarily based?
Complete the severity/frequency matrix in relation to methods of dealing with risk.
What is the main difference between operational and financial hedging?
Name three advantages and three disadvantages of debt as a source of finance.

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ACCA P4 Advanced Financial Management Practice And Revision Kit 1st Edition BPP Learning Media - Solutions

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