interest rate collar

answered on 06-May-24 11:07

In this question if instead of Cap option, collar option was taken would that be more advantageous?

latest answer

I know. That was weird. You can state that in a collar you sell a floor. If floor is set at lowest rate the interest has gone to in the questions then floor will never be invoked When such a floor is sold, you receive premium That premium will reduce your outflow of 70 or 80 bps and If it that premium received is also 70 or 80 bps then the collar can become a zero cost collar

Priyanka Udeshi

CA Final

★ 14K+

3

54

Bootstrapping

answered on 05-May-24 04:34

Request if you could help me to recollect where the bootstrapping formula (as used in this sum) was used in any earlier part/ chapter?

latest answer

Sec val fixed income spot rates forwardcrates

Priyanka Udeshi

CA Final

★ 14K+

1

53

Calculation error

answered on 14-May-24 11:20

The cap and floor amounts have been mentioned interchanged columns and also the final total is coming at 1663698. Also, the ICAI soln in the enclosed pdf for the same sum have taken interest costs without considering 0.5% for dates 30-6-15 and 31-12-15. Please confirm if the same is an error or not?

latest answer

We have made the change in the video - thanks once again for highlighting

Priyanka Udeshi

CA Final

★ 14K+

2

67

Exponent

answered on 04-May-24 19:46

`In calculating EMA for 12 days why a=2/(31+1) and why not 2/(12+1)?

latest answer

Because they said use 31 day EMA

shamanth rm

CA Final

★ 2K+

1

43

Premium on options - Forex

answered on 04-May-24 09:03

Which rate is applicable for premium payable on option contract - current spot rate or strike price ?

latest answer

Premium is paid upfront . So current spot is to be used for computation of premium if any

shamanth rm

CA Final

★ 2K+

1

55

FCFF

answered on 03-May-24 13:23

Why Interest is added back? Interest is non operating exp and we are taking cash flow from operations as a base, to calculate FCFF.

latest answer

Yes sir. As per US GAAP interest is operating but under IFRS IAS 7/Ind AS 7 , this is financing expense.

Mansha Tutlani

CA Final

★ 555

2

73

No of days for interest

answered on 03-May-24 07:42

For interest calcn, since Global ltd requested for delivery of remittance on 02 Mar, should the number of days taken be 30 or we consider 31 basis that the amt was received by Global ltd on 28th Feb. Although latter has been considered in solution, wanted to understand the logic in selecting dates

latest answer

For all boring or interesting computations we either include day of borrowing or day of repayment but not both. If u borrow on 1st Jan and repay on 31st Jan interest is computed for 1st Jan but not for 31st Jan Same way depeivery received on 28th feb instead of 31 dec So 28th he is considered and 30 days in next month so total 31 days

Priyanka Udeshi

CA Final

★ 14K+

1

37

Why you did not reduce Dividend from return in 3rd part while computing NAV

answered on 02-May-24 17:17

Dear sir, while calculating NAV in part 1 . you reduced dividend from absolute return and added the amount to opening value of investment to find out the closing value of investment. But in 3rd part you did not reduced the dividend from the return while computing the closing value of investment. What is the reason ??

latest answer

Becuase closing value of investment is after dividend which is reinvested as shares units in MF hence you have to deduct Dividend to arrive at NAV at which dividends were reinvested and to find out exactly how many units are allotted

B. Dinesh

CA Final

★ 3K+

5

47

Audio of the Classes

answered on 30-Apr-24 07:03

Audio of the classes became challenging to listen because for for every video levels, tones of the audio were going up and down some times in the same video voice goes up and down. Please stabilise the audio quality and maintain same level of sound system throughout the entire videos.

latest answer

We were not aware of this till now. No one had highlighted it. Thanks for highlighting. Pls let us which all videos need to be adjusted and we shall do so

Sindhu Pullela

CMA Inter

★ 0

1

68

Doubt on terminal value

answered on 29-Apr-24 19:28

1.Why are we doing terminal value as it is not mentioned in question? 2.Why are we not considering for the same terminal value with old strategy ? 3.Why are we considering terminal value at 3rd year end ? Please explain it sir .

latest answer

When they used the word cash flows are stabilized that is an indication that from that point onwards terminal value can be found. So terminal value is found out after year 4. This terminal value if found for cashflows from year 4. Just like in DDM Where P0 is D1/(ke-g) for value today next years CF are considered , when Yr 4 onwards CF are stable terminal value if found out one year prior to to T3 that is T3 IN old strategy since there is no growth terminal value if found out in year 0 itself i.e 1400/0.15

Hanumanthu Rajesh

CA Final

★ 7K+

1

58