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FOREX
AFM
answered on 16-Nov-23 06:42
Generally direct quotes are quoted as one unit of foreign currency expressed in domestic currency. Ex : USDINR but there are exceptions like GBP ,AUD,EUR. so in problems if it states USD/GBP , for britan resident it should be indirect quote right ? But in illustration 29, USD/GBP has been considered as direct quote. ideally it is indirect quote. so how do we know whether to treat it as direct or indirect quote ?
latest answer
Thank you sir
Enuguru Sai Nithin
CA Final
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FOREX
AFM
answered on 16-Nov-23 13:08
In the problem, actual forward is greater than theoretical forward ,( .780 >.779) , so as per logic buy cheap , sell costly , so rather than selling DEM @.780 after 3 months , can't we buy DEM @ .779 after 3 months ? Because we are buying at cheaper rate only. I had figured a logic , why in the problem it is considered as sell DEM ,pls correct me if it is wrong. Forward premia is less than intrest differential so we need to borrow foreign currency, here foreign currency is DEM, so if this is the 1st leg , if we borrowed foreign currency, ultimately we have had to sell them after 3 months. So is this why we are selling DEM rather than buying ? so will buying and selling depends on premia and intrest differential ?
latest answer
Your logic is absolutely right. Buying and selling depends on Premia and int diff- however I intentionally did not explain it that way because a lot of students may get confused and simpler way I thought of explaining is buy cheap and sell dear - however in one of the videos, I do remember mentioning it
Enuguru Sai Nithin
CA Final
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Utility in SFM
AFM
answered on 04-Nov-23 10:20
Hi sir, in ch 4 of AFM i.e capital budgeting.. specifically in illustration 30, what utility means in general. whether it is something like certain cashflows?
latest answer
In economics, utility is a term used to determine the worth or value of a good or service. More specifically, utility is the total satisfaction or benefit derived from consuming a good or service
Dhanushree Shanmugam
CA Final
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484
Portfolio Management
AFM
answered on 22-Oct-23 05:54
Can you please show how intrinsic value is calculated in this sum.
latest answer
Rf = t bill rate Rm is given Beta = covariance / market variance Ke = CAPM Use 2 stage dividend disc model for finding out P0
Harsh Mittal
CA Final
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Valuation of debentures and bonds- Q.no.34
AFM
answered on 20-Oct-23 11:18
Sir, why is tax deducted from redemption premia while calculating cash cost ? Do we need to deduct tax on cost?
latest answer
Okay sir.
Srikanth Srimath Tirumala Peddinti
CA Final
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526
Security valuation Q33
AFM
answered on 30-Sep-23 11:03
Sir Why is in tax saving (3-2.5)/10 is taken when issue cost is incurred only once
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Okk Understood sir
A Sivani
CA Final
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Derivatives
AFM
answered on 17-Sep-23 18:14
Can anyone explain me what is short and long term used while studying future derivatives
latest answer
short mean sell When you are short of some thing it means you dont have it long mean the opposite - when you buy something you are said to be long on something
Sairam Reddy
CA Final
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555
Portfolio Management- Illustration 26
AFM
answered on 14-Sep-23 07:41
Hello Sir, In this problem, we have assumed GOI bonds return as risk free rate however the beta value is given in the question as 0.01 which is not zero as of a risk free asset. Also as you mentioned, ICAI answer is confusing as they have computed Market Portfolio using the securities given in the question. How do we approach these types of questions in the exam?
latest answer
Unlikely that you will get such questions in exam going by recent trend. Even if they come - take most reasonable assumption and move forward.
Suresh Avinash
CA Final
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Security valuation Duration
AFM
answered on 01-Sep-23 21:21
Sir I didn't understand the short cut formula for calculating Duration of bonds
latest answer
Ok sir
A Sivani
CA Final
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605
Query with teacher day spl course
AFM
answered on 01-Sep-23 04:52
If we purchase Teacher's day spl ( without books) - do we get pdf of books or not ?
latest answer
Pdf - yes
Enuguru Sai Nithin
CA Final
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576