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Mergers and Acquisitions

SFM

answered on 11-Aug-23 15:53

Sir in this question they haven’t said the P/E Ratio is same after the merger then how can we multiple the P/E ratio with EPS to find out the Market value post merger?

latest answer

Ok. If you do not consider the old pe ratio what do you want to use?

Swathi Krishna

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130

Portfolio Management- TYK question no 15

SFM

answered on 11-Aug-23 15:48

How can we get the value of y1 is 0 by solving this formula

latest answer

0.6 Y2 and 1.2 y2 are two terms in two equations which can be eliminated by doubling the equation therefor ey1 will be 0

lipsana hamzamon

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97

Portfolio Rebalancing

SFM

answered on 31-Jul-23 21:01

How is Rs 4502 offloaded in this case?

latest answer

Sell RIsk free ( 242287-237785) = Invest in Equity 64430-59928 = 4502 What is your query here ?

Swathi Krishna

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131

Derivatives- Options Illustration 7

SFM

answered on 26-Jul-23 16:48

Hello sir, In this problem, they have given risk free interest rate as 3.6% and a one month call. Why did we not take e^rt as e^(0.036*1/12)

latest answer

How will compute the 12th root of e power 3.6%? In this probelm they did not mention that 3.6% is 1 year disc rate or 1 month disc rate it is easier to assume it as rate for 1 month and solve it. These are simple problems that will not be asked in exam also in exam they will be more specific whether the rate if for a month or year. What you said is also right but it is a computation nightmare using a normal calculator

Suresh Avinash

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131

Forex

SFM

answered on 26-Jul-23 14:42

Illustration 90 There is cancellation gain sir But it's written as loss

latest answer

Yeah - getting it corrected - it was written as gain initially and then changed to loss - not sure why Gain is right

Priya Namburi

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149

Binomial Method- Two Period Lecture 83

SFM

answered on 24-Jul-23 07:49

Hello Sir, What is the reason behind considering the time period as 1 year in calculating the probability percentages for the prices at the end of two year period? Should we not calculate the probability using two as t and discount it two times using the interest rate to calculate the present value as at year 0.

latest answer

Understood sir, thank you

Suresh Avinash

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129

Maintenance Margin- Derivates Illustration 14 and 27

SFM

answered on 24-Jul-23 07:38

Hello Sir, Is the maintenance margin calculated as Contracted Future price*Percentage (which will be a constant number) or will it be the daily closing value*percentage. Because in the illustration-14 of futures, the maintenance margin considered is 12,000 and we have taken the same number to be as maintenance margin for all the days but in the illustration 27, the maintenance margin is computed daily as settlement price*lot*% required.

latest answer

In real life it varies as % of future value For simpler understanding in some questions that may specify maintenance margin as a constant value throughout

Suresh Avinash

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153

Derivatives- Illustration 16

SFM

answered on 22-Jul-23 12:29

Hello Sir, In this problem, if we assume that the dividend is paid on the last day in this case why have we not discounted the amount? Because in the illustration 15, where the dividends were paid 3 times in 30, 60 and 90 days, we have discounted it and subtracted from the spot price

latest answer

If it is paid on the last day We need not bring it to Present value - In Q16 - If you go through problem 15 carefully you will notice we brought it to Pv and then again computed FV. We are doing this because we have been given e values like that. If they had given e values for 330 days, 300 days, and 270 days, we would have computed directly the FV of the dividends for those days

Suresh Avinash

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115

Derivatives- Illustration-3

SFM

answered on 18-Jul-23 10:24

Hello Sir, In case the dividend is accrued and still not paid to the person going on short, why are we still deducting it from the future price? As in your example if Hen has not laid the eggs, wont the seller include the value of eggs in the cost of hen?

latest answer

Ok sir, understand thank you

Suresh Avinash

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135

M&A- Illustration 29

SFM

answered on 16-Jul-23 22:27

Hello Sir, In Part-2 of this problem, while computing the value of the companies together why have we not considered the new shares issued (1,25,000) to arrive at the value of AFC Ltd?

latest answer

price per share of afc post merger is 102 102 is arrived at by dividing 11.51 cr / 11.25 lacs 11.25 lacs includes 1.25 lacs new shares issued

Suresh Avinash

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126