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Derivatives- Futures and forwards
AFM
answered on 13-Jul-26 20:26
Sir in Qn 18th (b) part that is calculation of gain or loss if index goes to 10200 or 15600. in the solution to this part we have reduced loss on share amounting to Rs.3600 and also profit on futures Rs.4140 (Incase of 10200). But in qn 19th (iii) part we have not added or deducted any loss or gain on share. Why sir [Video Time Stamp: 33:28]
latest answer
Solutions to both the questions are presented differently based on the way the question is structured Q 18 asks us look at overall portfolio profit / loss - one cash position and other futures position. There is profit on one side and loss on the other and they both offset each other in both scenarios Q 19 we are asked to check for arbitrage opportunity. When MP of futures is not equivalent to theoretical price - arbitrage opportunity arises. In such an arbitrage transaction, we borrow money to buy spot and and at the same time short futures. In both scenarios of Q 19 part 3 we make a profit. - here also we are making profit on futures in one scenario and loss on futures in another scenario. These two profit and loss are offset by net vale of ( Sell spot index + repay loan) Dividend and interest repayment are common in both scenarios of Q 19 part 3.
AGALYA KANNAN
CA Final
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77
Doubt
AFM
answered on 13-Jul-26 15:33
Here they said capex is 34 and 38.but PPE has only an increase of 23.remaining amount is 15 which we don't whether it is for operating or investing. [Video Time Stamp: 07:33]
latest answer
You have to adjust for depreciation of 23 of current year Balance or is NFA increase in fixed assets is computed on GFA basis Explained it subsequently if I recollect
pavan kumar
CA Final
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69
Doubt
AFM
answered on 13-Jul-26 15:34
Here capex is also related to operating activities that it means the amount used for purchase or sale of operating assets.why are we reducing capex separately? [Video Time Stamp: 04:57]
latest answer
Capex is always treated as investing and never as operating
pavan kumar
CA Final
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63
Doubt
AFM
answered on 12-Jul-26 13:59
Why are we considering 5 years, instead we can end after 3 years.
latest answer
We are considering 4 years data you can solve with 3 and get same solution 2014 is D0 so it is not considered in future projection
pavan kumar
CA Final
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85
Illustration # 83 - Cancellation on due date
AFM
answered on 12-Jul-26 09:30
Sir, I have one doubt. In this question, why has the customer exchange margin been deducted? Could you please explain the logic behind applying the exchange margin here. [Video Time Stamp: 11:18]
latest answer
Rule is that on all last cancellation there is a margin that is collected by the bank from the customer.
Vaikundaraja A
CA Final
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104
Illustration # 76
AFM
answered on 11-Jul-26 20:55
Sir, in this question the forward discount is 1.037%, whereas the interest rate differential is only 0.4854% (1.035/1.03 − 1). Based on this, I thought it would be better to borrow USD from the market, since the interest cost appears lower, and then invest or convert it into GBP. However, in the solution we are borrowing GBP instead. Why are we borrowing GBP in this question? Is my understanding correct? If not, could you please explain the logic behind borrowing GBP instead of USD?
latest answer
Got it, sir. Thank you
Vaikundaraja A
CA Final
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72
Doubt
AFM
answered on 10-Jul-26 17:04
In wordings we are taking required rate of return as ke sometimes and the same is used as ROE.please tell us where to use both. [Video Time Stamp: 00:01]
latest answer
When they talk abt investor expected return or return of equity holder it is Ke when they specifically use ROE you have to consider it as ROE
pavan kumar
CA Final
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62
Doubt
AFM
answered on 10-Jul-26 17:12
Here they mentioned the dividend is 20%. Actually we are taking dividends based on earnings available to equity.which one should be considered.please tell me the situation where we use d/p ratio and percentage of face value.
latest answer
Yes
pavan kumar
CA Final
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80
Doubt
AFM
answered on 09-Jul-26 17:01
Here undistributed profit has to include reserves and surplus too. Why are they not taken into consideration? [Video Time Stamp: 01:00]
latest answer
Thanks for timely responses from you for every query sir.
pavan kumar
CA Final
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120
FV
AFM
answered on 09-Jul-26 13:33
Sir, so if we calculate FV for 900 at 18.25% for 4 years it will be equal to the FV of CF at 16% + maturity. Is this correct sir?attached the working. [Video Time Stamp: 13:24]
latest answer
Yes correct
Selvakumar R
CA Final
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