Anyone sitting BS2 Exams?

Butters111 · 25-05-2010 2:53pm

I think that formula is a bit different to the one he gives us and gives a diff answer for some reason. same happened with me, once you use the formula given should be grand. Anyone have a formula for calculating bonds or know how to do it please?

cartman555 · 25-05-2010 3:05pm

the way I calculate Bond prices is:

Price = (Coupon payment % ie 4)(Present Value of price of bond, using yield and number of years on the PV of annuity tables i.e the bottom one on the excel file) + 100( the value for yield vs years on the 2nd table on the excel)

Seems to always get me the right answer anyway!

DeadMoney · 25-05-2010 3:11pm

Butters111 wrote: »

I think that formula is a bit different to the one he gives us and gives a diff answer for some reason. same happened with me, once you use the formula given should be grand. Anyone have a formula for calculating bonds or know how to do it please?

ok so I think i'll just stick with the IRR formula he gives us, sorry to keep going on about this question but i'm still stuck on it. What is the general guide line again? For the 08 question we have 15% cost of capital and the npv using this gives us €10,650 for part A of the question.

So, do we just estimate a second cost of capital % and calculate NPV, and then plug both value in to the IRR formula we are given and see if it = 0?

P.s, hard to believe this question was only worth 5 marks.

DeadMoney · 25-05-2010 3:13pm

Sample answers for short question on moodle guys.

DeadMoney · 25-05-2010 6:51pm

Hey, I am looking at the notes for capital structure notes, do we have to know all of this? I'm assuming this could be a full question C as theres a fair bit in it.

Butters111 · 25-05-2010 6:58pm

cartman555 wrote: »

the way I calculate Bond prices is:

Price = (Coupon payment % ie 4)(Present Value of price of bond, using yield and number of years on the PV of annuity tables i.e the bottom one on the excel file) + 100( the value for yield vs years on the 2nd table on the excel)

Seems to always get me the right answer anyway!

Thanks!

Butters111 · 25-05-2010 7:03pm

DeadMoney wrote: »

ok so I think i'll just stick with the IRR formula he gives us, sorry to keep going on about this question but i'm still stuck on it. What is the general guide line again? For the 08 question we have 15% cost of capital and the npv using this gives us €10,650 for part A of the question.

So, do we just estimate a second cost of capital % and calculate NPV, and then plug both value in to the IRR formula we are given and see if it = 0?

P.s, hard to believe this question was only worth 5 marks.

5 marks? are you kidding me!! What i would do is do what AnCiteog showed us as far as getting the annnuity figure which gives you the 21%/22%, and then instead of using both pick one as the higher one and then 15% as your lower rate of interest.

I actually found this question worked out in my notes today :rolleyes: and Conor had done what anCiteog showed us as far as getting the 21/22 %.

Butters111 · 25-05-2010 7:27pm

so we dont' have to know section 2.1 'Asset Calculations'?:rolleyes:

DeadMoney · 25-05-2010 7:33pm

Butters111 wrote: »

so we dont' have to know section 2.1 'Asset Calculations'?:rolleyes:

No everything that was covered on the quiz 2 won't be asked but things like CAPM and WACC may come up in theory questions. How are ye getting on with all the theory, i sort of underestimated how much there was but have a fair bit learned so hopefully will be ok.

Butters111 · 25-05-2010 7:41pm

DeadMoney wrote: »

No everything that was covered on the quiz 2 won't be asked but things like CAPM and WACC may come up in theory questions. How are ye getting on with all the theory, i sort of underestimated how much there was but have a fair bit learned so hopefully will be ok.

sorry Its just everyone keeps sayin there's no portfolio calculations and they don't say anything bout 2.1 But anyway if it was on it I don't have time to learn the formula's again! I've gone through all his notes just haveto do the two extra windows documents. In saying that I don't really understand the concept of Debt and Equity- like why its cheaper to have debt over equity? is it not better to have your own money to spend rather then owing somebody?:rolleyes: enlighten me if you know please!

DeadMoney · 25-05-2010 7:46pm

Butters111 wrote: »

sorry Its just everyone keeps sayin there's no portfolio calculations and they don't say anything bout 2.1 But anyway if it was on it I don't have time to learn the formula's again! I've gone through all his notes just haveto do the two extra windows documents. In saying that I don't really understand the concept of Debt and Equity- like why its cheaper to have debt over equity? is it not better to have your own money to spend rather then owing somebody?:rolleyes: enlighten me if you know please!

Sorry can't really help you there, I'm just looking at this capital structure stuff for the first time also. Gonna be a late nite cramming all this info. Yeah its looking like this is the most possible long theory question for sec C so definitely worth knowing it.

DeadMoney · 25-05-2010 8:22pm

For the theory on capital structure are those notes just for additional reading out may he ask about these propositions? Coz they are explained in the slides as well in sec.3

Butters111 · 25-05-2010 8:30pm

DeadMoney wrote: »

For the theory on capital structure are those notes just for additional reading out may he ask about these propositions? Coz they are explained in the slides as well in sec.3

I had written in the section 3 notes in class that what was in them wasn't enough if we got a long question and that he was going to put up more ie. the windows document. So I'd say we should know it.

Butters111 · 25-05-2010 8:34pm

if a question asks to calculate 'the after tax cost of debt' do you use WACC?

DeadMoney · 25-05-2010 8:42pm

Butters111 wrote: »

if a question asks to calculate 'the after tax cost of debt' do you use WACC?

Where did you see this question asked before? I thought WACC is needed when asked to calculate the cost of capital when the capital structure is not 100% Equity (i.e, CAPM).

Butters111 · 25-05-2010 8:53pm

DeadMoney wrote: »

Where did you see this question asked before? I thought WACC is needed when asked to calculate the cost of capital when the capital structure is not 100% Equity (i.e, CAPM).

Yeah I'm confused, 2008 paper Q 14 part B- I'm just after noticing part C is WACC so I dunno, how do you just find debt?

Butters111 · 25-05-2010 8:56pm

cashflows for question 11 seem a bit complicated, reckon its safe enough to just do 12 presuming its gonna be the same layout? gotta prioritise here and get this done before desperate housewives!!

DeadMoney · 25-05-2010 8:58pm

Ugh ugly question! I really don't know to be honest but I am sort of banking on doing a theory question for sec C so I'm no really focusing on this stuff. I don't even recognise some of the things asked in that question which obviously isn't good. We can only answer 1 question from each section so if you are unsure what to do, I would just focus on learning the theory so that you can approach this question with more confidence.

EDIT: I mean the question on the paper is ugly

DeadMoney · 25-05-2010 8:59pm

Butters111 wrote: »

cashflows for question 11 seem a bit complicated, reckon its safe enough to just do 12 presuming its gonna be the same layout? gotta prioritise here and get this done before desperate housewives!!

yep thats what I'm doing anyway....except the desperate housewives

cartman555 · 25-05-2010 9:15pm

does anyone know if we are meant to know how to do Q14 2008 and Q13 on the 2008 repeats? And if we are could you give a brief outline of how to approach/do it because I cant see much on the notes. cheers!

Butters111 · 25-05-2010 9:27pm

'Drogba Ltd has a beta of 1.2. Work out the expected return on Drogba's shares if the
yield on short-term Government bonds is 5% and the expected return from the market is
11%.'

Anyone know what the risk free rate is in this question?

Butters111 · 25-05-2010 9:29pm

cartman555 wrote: »

does anyone know if we are meant to know how to do Q14 2008 and Q13 on the 2008 repeats? And if we are could you give a brief outline of how to approach/do it because I cant see much on the notes. cheers!

Hey we didn't do debentures or a lot of things in those q's. I dunno how to help you out cause i dunno myself! Hopefully we'll have a theory question intead!

DeadMoney · 25-05-2010 9:37pm

Butters111 wrote: »

'Drogba Ltd has a beta of 1.2. Work out the expected return on Drogba's shares if the
yield on short-term Government bonds is 5% and the expected return from the market is
11%.'

Anyone know what the risk free rate is in this question?

CAPM=.05 + 1.2 (.11 - .05)
=.122 (x100 to get 12.2%)

Where ever you see 'beta' in a question, use CAPM equation.

Butters111 · 25-05-2010 9:54pm

thank you!

DeadMoney · 25-05-2010 10:23pm

I'm just memorizing words here with this capital structure theory, nothing makes sense to me, what a pile of ****!

Butters111 · 25-05-2010 11:07pm

DeadMoney wrote: »

I'm just memorizing words here with this capital structure theory, nothing makes sense to me, what a pile of ****!

yeah i really don't get it.. too tired now too! yuck

DeadMoney · 25-05-2010 11:29pm

yeah it sucks, can't believe I didn't even look at the capital structure notes until this evening, what was I doing? Oh well I'm not going to bed until I've learned the stuff :rolleyes:

Butters111 · 25-05-2010 11:34pm

DeadMoney wrote: »

yeah it sucks, can't believe I didn't even look at the capital structure notes until this evening, what was I doing? Oh well I'm not going to bed until I've learned the stuff :rolleyes:

don't worry you're not alone! ha yeah ill try give it ashot for a while then if I don't get I'll do it in the morn! I need sleep!

Butters111 · 25-05-2010 11:59pm

Good Luck everyone!:)

DeadMoney · 26-05-2010 12:06am

Butters111 wrote: »

Good Luck everyone!:)

Ty, you too

Anyone sitting BS2 Exams?

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