1. About operating treasury activities, (1)compare regional with in the country & (2)regional with global. 重组后设立哪种规模的财务部门比较好

[2017/Sep/Q4 Wardgul Co/2/7 point] 结合题意，W Co因为过度扩张才需要重组
共三种模式：
每个国家设立一个财务部
每个地区设立一个财务部
全球设立一个财务部
问题的核心是：centralized or decentralized, 本题处理why regional better

(1) regional vs country
① 获益于结构
treasury activities constant with group activities
achieve synergies with other functions
benefit from information flow based on regional structure
② 对于同一收购方，财务处理更方便
simpler to arrange for a single provider on a regional basis of reorganization than arrange for separate providers in each country
③ 人才充分利用
avoid duplicated responsibilities in each country within a region
staff based nationally more likely to be under-employed
enough complex work on a regional basis to justify employing specialists
enhance the performance of the function
easier to recruite specialists regionally rather than in the country
④ 更省钱
manage funds mean less cost on a regional basis than on a national basis
e.g. pooling cash , borrowing and investing in bulk , netting of foreign currency income and expenditure
⑤ 选址自由
centre can be located anywhere in the region
centre can be located in the most important financial centres which offered significant tax advantages
⑥ 便于设立标准
(依照manager的观点)easier to enforce common standards and risk mgt policies regionally than in countries with different culture
(2) regional vs global
① 解决global存在的问题
reorganizing treasury functions can deal with problems of having a single overstretched global function
② 人才的经验不足以处理国际事务
regional function can employ experts with knowledge of regulations, practices and culture of major countries with the region
difficult to recruite staff with local expertise for a global function
③ 时区一致
practical issues
e.g. a regional function will be based in the same, or similar time zone as the countries in its region
④ 更多投融资机会
better opportunities for local finance and investment
e.g. better alternatives for inv of surplus funds than centralised function can identify

[2021/Mar/Q1 Chakula Co/1/5 points]

① 复述题意+对比有无
key reason, RF in M&A, ensure interests of stakeholders
natural mkt forces not ensure sufficient protect
RF aims to ensure a well-functioning mkt for corporate control
② 如何保护股东
shareholders(shlder) as major stakeholder group, RF establish target not affected negatively by ensure:
-minority shlders’ rights protected
-target co mgt cannot block a M&A as is in commercial and economic interest of shlders 管理层不能阻碍股东决策
-sufficient time and information for a proposal/deal to be scrutinised 仔细了解情况
③ 如何保护其他利益相关者
to other stakeholders
-ensure not a substantial lessening of competition after M&A
-protect consumers, suppliers and employees’ choice in engaging with that biz sector and within a properly functioning economic mkt

3. 债融资和股股交换出售分别有什么好处？

[2021/Mar/Q1 Chakula Co/2/6 points]

(1)借钱买公司，意味着债增加
debt is cheaper
tax shield attached to debt finance, 解释tax shield: pay ints before pay tax, profit used to pay ints not have to pay tax
result in cost of capital ↓, because proportion of debt ↑
(2)1 for 3 share exchange
tax shield no longer hold true if gearing level high: financial risk ↑↑, override tax shield benefit
result in cost of capital ↑
if gearing ↑↑↑, cost of capital still increase, as there’s a minimum cost of capital

4.1 卖掉一部分核心资产/产业对于防并购是否合理且有效？

[2020/Sep/Q1 Kingtim Co/1/3-4 points]

① known as selling the crown jewels: sell assests they most desire -> deter acquirers looking to buy whole chain
sell off individual centres whithout jeopardising its overall existence
② 即使卖掉几个centre, if cash surpluses no particular use, 仍面临并购风险
shlders希望：return the surplus cash to shlders in the form of a one-off dividend, 但是卖掉assets(centres)会影响公司未来的return，即他们自己的收益，因为这些centres能generate significant income, 他们希望知道卖掉centres的所得cash不用来继续invest的话board有什么下一步打算
况且，如果money distributed to shlders, K become smaller company -> more affordable to acquirers

4.2 增加ED工资和补偿条款对于防并购是否合理且有效？

[2020/Sep/Q1 Kingtim Co/1/3-4 points]

① enhance commitments to ED -> increase burden for acquirers: cost of honoring them or cost and time involved in terminating the directors’ employment and compensating them, if decision to acquire is marginal, this burden may deter acquirers
② However, enhancing commitments to ED could be ineffective , acquirer could decide to keep EDs on and pay higher remuneration, acquirer may believe cost to buy out EDs’ contracts is necessary

Corporate governance aspects are also important. As a listed co, K should have a remuneration committee made up of non-excutive directors(NED) -> reviewing EDs' remuneration packages; K have to publish a remuneration report to explain the rationale directors' remuneration, and allow shlders to discuss and perhaps vote on the report.

Shlders may believe directors are given better compensation package for no other effort and no other reason, they may doubt whether directors act in the interest of them.

4.3 ？

(b) Assumptions
① return from inv depend on how Co attract customers from competitors rather than from a new market, competitors’ actions may affect returns
② 用于计算Ke的CAPM model: assume to be a good predictor of equity return, practically it cannot be.
③ βa represent similar Cos, may not accruate for this Co. 本题特殊：公司再投资另一行业后，βa是NCA比重为比例的Weighted average βa, which assumes NCA valued fairly, NCA valuation represent their income-generating potential and proportion of biz risk in that each biz.
④ share price and bond price assume to be unchanged when inv made, while there is a strong posibility of changed, hance will change cost of capital.

(c)(1) equity holders’ concern
① consider return from new inv not sufficient(as calc result:WACC 10%->10.4%), cost of capital的变化，earning的变化，earning%是否超过bond利息率足够多（WACC10.4%相对7.5%bond是不够多的）
② concern about both biz risk and fin risk, Co enter a new sector with compitition which cause high biz risk(题意)
③ concern about variability of returns and dividends, as new inv in NCA(premises) cause increased operating cost burden and fin cost（介意盈利意味着介意cost的增加，可以关注重组造成的cost）; variability of return cause share price volatile
④ concern about restrictive covenants attached to new bonds and planned repayment of bonds including existing significant bond ang new bond, 是否需要通过refinancing来还款
⑤ equity holder reconsider their inv in Co, if they are risk-averse and do not think additional return compensate for the risk, they may think return lower than inv, although they are not required to make addtional inv; share price will fall if significant no of shlders decide to sell, althouth Co may attract new shlders who more risk-seeking

(c)(2) bond holders’ concern
① concern about Co’s ability to meed interest and repayment commitment(换一种说法：repay the capital), repay the existing bond and new bond
② concern about new inv allow Co to take undue risks
③ concern about motivation for new inv using debt finance, they not convince about new biz

(d) remunation
理论
① expertise, experience, seniority and commitment reflacted in extra rewards, out of fairness to the staff and of their value to biz; if with these attributes staff think reward not fair, they may leave and perhaps join a competitor
② Co has duty to enhance wealth of shlders and raise expectation by increasing dividends; stakeholder conflict: raise wages of employee would lower profit for attribution to shlders
结合题意
① lower wage may be unfair as commitment may be same, currentapproach may cause ethical issues, may harm reputation; to meed societies’ espectation, should treat staff fairly, otherwise Co be judged as discriminatory and against the law
② 如果公司为了防并购支付更多工资，这能削弱(undermine)员工提高工资的诉求，maintain reputation -> maintain shlder return
③ if not, lower-paid staff may leave, customers may stop shopping as poor treatment of staff

5. 对于future之一的option的valuation，为什么time until expiry和interest rate很重要？

[2020/Sep/Q3 Fitzharris Co/(c)/4 points]

Time
① option price consist of 2 elements: its intrinsic value and its time premium
time premium diminish to 0 at point of option expiry, which(theta θ) measures how much time value is lost over time and reduse put and call option value for holders
② for in the money and out of the money options: θ linear change
fot at the money options: θ change more rapidly approaching expiry date.
Interest rate
① ρ(rho) measure how option price change varies with option price
if risk-free i rate ↑, ρ>0 for call options, ρ<0 for put options
② i rate often move slowly, will have not big influence compared with other factors affecting option price
a change in i rate will be more imt the longer time until expiry

6. pros and cons of int rate swap compared with collars

[2020/Sep/Q3 Fitzharris Co/(b)/8 points]

Advantages of swap
① as swaps are over-the-counter arrangments, they can be arranged in any size.
作为对比的collars：amount cpvered by collars based on traded options is determined by the size of the option contract, there may be over and under hedging
② swap can be arranged for a longer period than option, which may last for a shorter period, perhaps up to 2 years
③ co is swapping a commitment to pay an uncertain variable rate of int with a guaranteed fixed rate of int, this allows co to forecast fin cost on the loan with certainty.
The net payment on the collar will depend on (only) int rate move.
(swap是可变的+固定的rate，collar rate只能可变)
④ unlike collars, swaps make use of the principle of comparative advantage. co can borrow in the mkt where best deal is available

Disadvantages of swaps
① Swaps are subject to counterparty risk, of which the other party may default on the arrangement.
if co arrange throught bank, it would not be a problem
if co arrange the swap itself, it may be a problem
对比：the option that the collar based on are traded on the derivatives markets -> guarantee no counterparty risk
② if swap into a fixed rate commitment, it cannot take adv of favourable int rate changed as it could
结合计算结果对比一下……
③ as swaps are over-the-counter instruments, they cannot be traded or allowed to lapse
对比：option can be traded on a derivative mkt

7. pros and cons of forward contracts (compared with over-the-counter currency options)

[2018/Dec/Q2 Nutourne Co/(b)/7 points]

Benefits of a forward contracts(fc)
① a fc would not involve payment of a large premium upfront to the counterparty
② a fc is a simple arrangement to understand
对比：while those devivatives have premiums of which the basis of calculation may be unclear
③ a fc gives a certain receipt for the purposes of budgeting

Disadvantages of a forward contract
① a fc has to be fulfilled, even if the transaction which led to the fc being purchased is cancelled.
exchange rate movements may mean that fc has to be fulfilled at an unfavourable rate.
对比：An OTC option can be allowed to lapse if it is not needed
② a fc does not allow holder to take adv of favourable exchange rate movements
对比：An OTC option need not be exercise if exchange rate move in holder’s favour
③ a fc may only be available for a short time period, depending on what currencies are involved.
对比：An OTC option may be purchased for a longer period, over a year.
④ a fc’s rate is predictable, while an PTC option’s rate may be more flexible, option more suitable for holder who are prepared to take risk of loss, which is limited by taking adv of favor exch rate

7. reasons of using exchange-traded derivatives

[2018/Dec/Q2 Nutourne Co/(b)/2 points]

① exchange-traded derivatives contract can be bought and sold as required(不用白不用)
② mkt regulated by exchange risk, counterparty risk -> should be minimised

8. 【FM基础】为什么财管的目标是“股东财富最大化”，而不是“利润最大化”？/ 利润的缺陷（不用背）

total shlder return = dividend yield + capital gain
Profit maximisation is often assumed, incorrectly, to be the main objective of a biz.
why profit not a sufficient objective:
① investor care about future
② investor care about dividend
③ investor care about financing plan
④ investor care about risk mgt
利润反映的是过去的信息

9. 【FM基础】怎样增加股东财富？

★ Inv will increase shlder wealth if they cover the cost of capital and leave a surplus for shlders.
Inv decision, Fin decision, Dividend decision -> risk mgt
融资：测算项目资金成本；投资：测算项目是否赚钱
发完股息留存的就是自有资金；自有资金不够：外部融资，可债可股，融资政策自己决定债和股的比例->杠杆
影响杠杆的因素：
① Life cycle: a new growing biz find it difficult to forecast cf with any uncertainty, so high level of gearing is unwise (新公司没人愿意借钱给你)
② Operating gearing(固定成本的占比越高，经营杠杆越高，经营风险越高): if fixed cost is high proportion of total cost, cf will be volatile, so high gearing is not sensible
③ Stability of revenue: if opreating in a high dynamic biz env, then high gearing not sensible
④ Security: unable to offer security: debt will be difficult and expensive to obtain 抵押物越多，越容易举到债 (房地产行业（资本密集型行业）天生杠杆比其他行业高，因为房子可用于抵押担保)

熟背 LOSS 实际需要结合案例，拿到题目就要考虑：这个公司是不是新兴公司，现金流稳不稳定
·是新兴公司：现金流不稳定；成熟的公司：现金流比较稳定
·经营风险高：外面市场有一点波动，现金流就波动很大，少举点债
·外界环境对收入的影响波动大不大
前三个因素都是现金流波动大，则少举点债
最后一个因素跟公司所在的行业有关，是否是重资产行业

10. 【FM基础】dividend decision

拿赚的钱给股东发股息，不发的就是留存下来的钱（留存率retention ratio: b来表示）
change during the course of a biz’s life cycle
young: zero/low div, high growth, want to minimise debt;
mature: high stable div, lower growth, willing and able to take on debt, possible share buyback

11. 【FM基础】cost of capital 资本成本

★ reflect risks of different form of capital
站在investor的角度：required return
=站在企业（财管）的角度：cost of capital
★ 企业going into liquidation(破产清算)：偿还顺序：debt finance(cheapest; 要求的回报：Kd) -> preference share(Kp) -> ordinary share(most expensive; ke)
风险越大，回报越大 kd < ke

Ke
最主要计算公式：股利增长模型 Ke=D1/P0+g=D0*(1+g)/P0+g P0=D1/(Ke-g)
assumption:
① ★ g can be estimated and is constant (这个假定不怎么成立) (50%概率要写，1 point)
② dividends are paid and co has a share price
如何估计g:
① use historic growth
e.g. 30*(1+g)^4=40 => 求得g 不管中间几年有没有给，都只用一头一尾求几何平均数
② use current re-inv level: g=br
b: 股息留存率retention ratio retention ratio=1-payout ratio 这个1指的是EPS
r: 权益净利率return on net asset =EPS/net asset per share ACCA中有很多叫法，只要看是不是权益资金的赚钱能力，是不是针对net asset

计算公式2：CAPM Ke=rf+(rm-rf)βe = rf+rpβe
β:该公司和整个市场的关系
★ Rational, risk averse invester will spread their inv across a wide range of securities in order to reduce their exposure to risk.
★ Unsystematic/Specific risk is gradually eliminated as the investor increases the diversity of the portfolio until a point which it need not be considered.
★ Systematic/Market risk is caused by factors which affect all industries and biz, such as: interest rates, tax legislation, exchange rates, ecomomic boom or recession…
assumption:
① investor have a broad range of inv
② some shares are sensible to mkt downturn
CAPM缺陷：（记1个）beta value are historic and will not give a accruate measure of risk

Kd
本金=利息/(1+r)+利息/(1+r)^2+利息/(1+r)^3+(利息+本金+premium)/(1+r)^4 => r：到期收益率 yield to maturity。

2020 Mar Q1

使用内插法：估计两个相近r使NPV为一正一负，计算位于中间的真正的r
站在融资者的角度，每年的利息可以抵税还要×(1-tax rate)，为了得到Y0的本金的实际r

Kp
Kp=D/P0 基本不考，优先股股息不抵税，永续年金，

WACC
各方面资金成本都算出来后可以加权得到WACC
不要为难自己，题目给出条件很复杂，就往简单去假设，把假设写下来都会有分，和自己和解
WACC=Ve/(Vd+Ve)*Ke+Vd/(Ve+Vd)Kd(1-T)
★ assumption:
① in the long term the capital structure unchanged (fin risk unchanged)
② proj has same risk as co (biz risk unchanged)

12. 【FM基础】discounted cash flow(DCF)

2014 Jun Q2

计算DCF时要包含opportunity cost: sunk cost…
给了inflation算cf就要用：real term/current price: 没考虑通胀；norminal/money: 考虑了通胀
计算DCF时不独立计算interest，interest是包含在折现率WACC里的 operating cf before int after tax
给出的residual value基本确定都是考虑了税和通胀的

13. IRR & Modified IRR

★ IRR assumption: 再投资假设 cf after inv are reinv at proj’s IRR.
★ MIRR assumption: funds are reinv at minimum required return, which is WACC.
★ Advantage of MIRR: ① more realistic than IRR about reinv rate; ② does not give multiple answers

14. 计算DCF的risk & uncertainty

risk:
① expected value:using probabilities to calculate avg expected NPV
② risk adjusted discount factor: use a higher cost of capital if risk is high
uncertainty:
① payback period: quicker payback, less reliable on later, more uncertain cf (缺点：没考虑time value)
② discounted payback period: 用PV来算，adjusted for time value
③ ★ sensitivity analysis: what % of change of one variable for NPV to fall to 0
④ simulation模拟测试: analysis more than one variables may affect NPV(只要会这一句话)
⑤ proj duration: how long it take to cover half of inv value(主计算)(payback period是cover all inv, duration是cover half)

15. value at risk (VAR)

normal distribution 正态分布
95%, t-year PV VAR=standard deviation pv of cf*1.645(查表)*√t
t是年份，√t = t^½

比如给出NPV=$2293，这个值一定是正态分布的中间值
考试一定会给标准差 standard deviation, 比如$400
95%, 5-year present value VAR=$4001.6455^½ = $1471
90%, 5-year present value VAR=$4001.2825^½ = $1147
cf低于$822(2293-1471)的可能性是5%，cf高于$822的可能性是95%（单尾测试，只砍掉左边最坏）
it can be 95% confident that pv will not fall by $1471 over its life

16. aim of free trade area自由贸易区; benefit of co operating within the area(5 points)

Aim
① aim to remove barriers to trade and allow freedom of movement of production resources such as capital and labour
② have a common legal structure across all member countries
③ try to limit any discriminatory practice aganist cos operating in these countries
④ build common external barriers to trade against countries which are not members
Benefit
benefit from a number of ways as trade within it…
① be able to compete on equal terms with rival cos within it
② cos outside area find it difficult to enter the area mkt due to barriers
③ A commom legal structure should ensure the standards of quality and packaging apply equally across all member countries
④ easier to undertake due diligence of logistic networks used to transport products(题意是冷冻食物，更重视运输) because of common compliance requirements
⑤ have access to capital and labour within area
⑥ may be able toaccess some grants

Risks
① may have different legal regulations on production and packaging, ensure detail process with regulations
② if reaching the limit in regulation in country outside will impact its image negatively overall, even if acceptable
③ some countries not recognise the trademarks or production patents which the co hold, may enable competitoers to copy product
④ whether product culturally acceptable by countries outside
Strategies
① undertake sufficient research of the countries’ law, ensure co comply with standards required
② keep learning country latest law, ensure comply with bast practise
③ investigate the extent to which co face difficulty in overcoming restrictions, less favourable conditions and lack of trademarks and patent protection, should take these into account
④ strict contracts need to be set up by both sides
⑤ items add costs need be included into financial analysis

18. Proj cost of capital(Kc)

Step 1: find a quoted co in that biz
βe = biz risk + fin risk
Step 2: adjust β to reflect difference in gearing
in reality, βe also affected by gearing
★ to know biz risk, gearing need to be stripped out of βe -> βa: ungeared beta, asset beta (biz risk)
βa’ = βeVe/(Ve+Vd(1-t)) + βdVd(1-t)/(Ve+Vd(1-t)) , βd=0
Step 3: Use re-geared βe to calc appropriate cost of capital
βe = βa’*(Ve’+Vd’(1-t))/Ve’

商业风险加权思想（30%考）：βa=βa1A% + βa2B% + … 然后计算项目的WACC…

19. Theories of capital structure

Triditional theory: U字型波动，有最小值
suggests that some debt will lower Kc, but if gearing rise above an accepable level, Kd will rise dramatically causing WACC to rise
MM theory: 直线
ignore tax: debt will not reduce fin cost, so does not reduce WACC; as gearing rise, Kc not change
with tax: reduce fin cost, reduce WACC; as gearing rise, Kc reduce; WACC越低，公司价值越高; so raise debt as much as co can
assumption: perfect mkt, ignore fin distress cost(财务困境成本) and agency cost(代理成本), in reality not true
做题：ungeared Ke represent return, which compensate for biz risk; in the same industry, same biz risk
Static trade off theory权衡理论
不可能d↑，Kd不变
Agency theory(基于3)
restrictive covernants prevent co investing

做题：给出两个投资决策，求WACC哪个低，或EPS哪个高
Kc(50%考)

[2016/Dec/Q1 Morada Co/(a)/3 points]

Owner or shlder will accept that it needs to engage some risky activities in order to generate returns in excess of rf.
A biz will be exposed to differing amounts of biz and fin risk depending on the decision it makes.
Biz risk depend on the decision the biz related to the services and products it offers, considering demand for its products, rate of innovation, action of competitors, etc.
Fin risk relate to volatility of earnings, considering its fin struction, biz, gearing, exchange risk, credit risk, liquidity risk, etc.
A biz exposed to high biz risk may not be able to tke excessive fin risk, and vise versa, as shlder may not want to bear risk beyond their acceptable level.

21. how risk mitigation and risk diversification form part of risk mgt strategy?

[2016/Dec/Q1 Morada Co/(a)/3 points]

Risk mgt: identification, assess, measure, predict, analysis, qualify, make decision, assume, avoid, retain, transfer
according to controllability, frequency, severity
Risk mitigation: transfer risk out of biz by hedging or insurance.
Risk diversification: spread biz activity into different products and services(area, industry) to minimise

22. why a risk mgt system should consider biz risk and fin risk, before take any action?

[2016/Dec/Q1 Morada Co/(c)/7 points]
open-ended question

risk mgt more than risk mitigation and risk diversification, proposals of selling or raising new funds will cause unnecessary fluctions, changes need to be fundamental more than just risk mgt tools
as theoretically described above, risks should be identified, assessed and then mitigated according to co’s risk appetite.
risk mgt process should be undertaken to increase shlder wealth, co should consider what drives this value and the risks associated with that value, come controllable some uncontrollable, some severe some less, some more frequent to occur than others
co may take the view that non-controllable, severe and frequent should be eliminated. For example, co will be more professional in managing flight delays or hotel standards, which can be more competitive than not have, but would not be able to hedge any currency fluctuation and insure against disastor as they are uncontrollable
risk mgt may increase value of co, if benefit from risk mgt more than cost to manage risk.
risk mgt help co take adv of mkt imperfaction by reducing tax payable or cost involved in fin distress
Therefore, risk mgt more than risk mitigation through reducing fin cost or risk diversification. It is a process of risk analysis, about judgement of which risk to hedge or mitigate, which risk-reduction mechnisium to employ, depending on the type of risk, the cost of the risk analysis and mitigation, and the benefit accrusing from the mitigation.

23.Bond

As yield(required rate/Kd)↑, bond price↓, inverse relationship, not linear, but convex to the origin
P=cf1/(1+Kd)+cf2/(1+Kd)^2+…+(cfn+par)/(1+Kd)^n P和kd是反向关系
已知P求Kd用内插法 internal rate of return approach
YTM(yield to maturity)到期收益率：持有至到期现金流折现=当前债券的价格
sum of pv of all future income of bond = current bond price
Duration: time to recover half of repayment of int and capital of bond
Macaulay Duration=(pv11+pv22+…+pvn*n)/inv
Modified Duration=Macaulay Duration/(1+r) (years) (25%考)
不求高分只要描述modified duration的公式即可 (years)
higher modified duration mean the fluctuation of bond be greater
approximately：duration assumes the relationship between rate and value is linear, infact is convex to origin(凸向原点)

24. Yield curve收益率曲线

longer period of maturity require higher interest rate as compensation for risk
explanation: ① expectations theory, ② liquidity preference theory, ③ mkt segmentaion(分割) theory
如果一道题yield curve不变可以写：the value of bond based on flat yield curve(可以写一下具体数字), a more accurate method would be access the yield curve based on future risk-free rates and credit spread for co. incorrect to assume bond of the same risk
the term(期限) structure of interest rate is represented by spot yield curve or simply the yield curve
不同年限的现金流价格不同，按照不同的rate求每一年pv， 从而求bond价格 (50%考)
estimate yield curve: 求r1->求r2->… (20%考)

25. factors affect credit rating considered by credit agency

country: at least normal rate
industry: recession of biz, co’s position within the industry compared with competitors(competitor more successful, more risk)
mgt: agency may assess mgt and succession planning of co, look at biz and fin strategy and plannign and control, how successful mgt deliver fin results, poor return show shortcoming in mgt decision-making process, they may rate the team poorly.
financial: analysis fin result, nsing methods such as return on capital employed(ROCE), look at relationship with bankers and debt covenants to assess how their resources are when under stress, watch gearing, vs industry average

26. why higher debt benefit?

① (说明)co face both fin risk and biz risk.
fin risk increase when debt level in capital structure increase
biz risk present due to the nature of biz
对d过高的收购方：
② buyer not able to bear high level of fin risk, it can change its capital structure without detrimental impact on its overall risk profile by taking over a co
② gain access to cash resource
③ increase debt capacity of acquierer by using asset of target co
对d不高的被收购方，多举债的好处：
④ help co from hostile takover bids
⑤ tax payable deducted by debt int, reducing taxable profit and therefore tax paid, which is the benefit of tax shield（要比较int paid and tax deducted，d↑->Kc先↓后↑）
⑥ debt level in amended capital structure increase result in Kc↓ and value of firm↑

27. Annuity

Annuity factor=(1-1/(1+r)^n)/r

28. 编写forecast SOFP步骤：

① 根据题意 ② 看看R/E(在reserve里) ③ 看看CA or cash

29. buy back equity shares

回购股票实际上是公司从市场上回购自己的股票（相当于买的是自己持有的那一部分股票），这些股票被收回后不再流通（相当于自己持有的一部分股票退市）
（e.g. 公司股票40%自己持有，60%流通在外，以市场股价回购一部分股票，是从40%里减的）
回购股票的目的是为了减少公司的股本，从而提高每股股票的价值，同时可以降低股票市场供应量，提升股价
ACCA里的分录：股本↓(book value的部分)，reserve↓(超出bv的部分)，

30. ★ 债务融资的影响因素

[2017/Dec/Q1 Conejo Co/(c)/16 points] 16分包括结合计算的分析
题意可能会写成：impact of proposed fin construction, proposal在题目中包括了举债的选项

Impact on co
Benefits:
① tax shield benefit: taxable profit can be deducted and so tax reduced
② debt↑, asset be used as collateral(抵押品), help protect against hostile takeover bids
Harm:
① postential negative aspects of raising such a substantial amt of debt finance, need pay int and capital amt, repayment need careful thought as amt is significant
② gearing↑(based on BV), fin risk↑, may worry some stakeholder, but gearing based on MV may not appear high
③ credit migration indicate some increase in risk, but not substantial
④ raise finance need disclose infomation, which is strategicly imt
⑤ raise finance may impact negatively on areas where co has a competitive advantage

Impact on equity holders
Benefits:
① purpose of financial reconsatruction is of interest of equity holder
② give an opportunity to liquidate some of their invested capital(给了股东一个机会可以将股票变现), 因为股票大宗回购会引起股价下跌
③ if one proposal is selected, any additional profit after int paid will benefit equity holder directly(计算数据的固定思路)
Harm:
① consider capital structure of its competitor to assess an appropriate gearing level(债融资的固定思路)
② equity holder consider additional restrictive covenants, which will restrict fin flexibility(债融资的固定思路)
③ profit has to pay int, may ffect dividend to be paid in future(债融资的固定思路)

Impact on debt holders
Benefits:
① higher coupon will negate the fall of Kd as credit rate↓
② 鉴于原本债的比重很低，现在举债造成gearing↑是正常的
Harm:
① concern about co’s ability to payback, may raise new debt to pay int and capital(plan to roll over the debt)(债融资的固定思路)

Conclusion
① as proposed, fin reconstruction is beneficial, will provide opportunity to make additional inv and to resuce equity capital, and thereby increase EPS
② increased gearing not large if by MV, beneficial to make debt loan when int rate low, credit migration not disadvantagous
③ need to be mindful about how to repay the capital amt, need disclosure and impact of any negative restrictive covenants

31. credit rating co要考虑的评级因素

① probability of default and recovery rate
② 只下调一个档次can propabaly be a safe inv
③ industry
④ co’s position within that industry
⑤ co’s ability to generate profit
⑥ gearing
⑦ quality of mgt

32. APV

step1: calc proj NPV at ungeared Ke: 从Ke下杠杆到Kei(use MM formula) / use βa(CAPM) to calc Ke 用题目给的利率重新折现（纯商业风险）
step2: add pv of tax saved at Kd惠 = int per year * t * (A,Kd惠,y)
(step3: add pv of saving due to subsidy loan at Kd, 用原始利率，不是优惠的利率) = (原int-惠int)(1-t)(A,Kd,y)
核心：不同的现金流用最能反映其风险的折现率来折

33. 为什么去海外投资？

① assess to new mkt 开拓没有竞品涉足的市场
② easier and cheaper raw materials
③ cheaper labour resource, gain access to expertise
④ cost related to logistic may be reduced
⑤ risk, such as economic risk and exchange rate risk, may be resuced where cost and revenue are matched

34. forecast exchange rate

use PPP formula: purchase power parity购买力平价
S0为current exchange rate(货币m/货币n), rm为m第一年货币m的通货膨胀利率, rn为第一年货币n的通货膨胀利率
S1=S0*(1+rm)/(1+rn)

35. strategies to overcome exchange control(外汇管制)?

① transfer pricing: parent co sell goods and service to subsidiary
② royalty payments: parent grant subsidiary patent, of which the size depend on wish of parent mgt
③ mgt charges levied(征收) by parent co during international operation (采购时/使用无形资产时cost多收点，以防profit被外汇管制)

36. bi-lateral tax treaty双边税收协定

当海外子公司返还利润到我国时，
如果外国税率比我国高，不用再交税了
如果外国税率比我国低，要补差额

37. adv & disadv of merges as an expansion strategy

一般不直接问优缺点，而是问某公司为什么从内增性策略转为收购
Advantage
① speed
② acquisition of intangible asset: brand, royalty, intellectual property.
difficult to achieve organic growth
③ access to oversea mkt
Disadvantage
① more biz risk
② more fin risk
③ acquisition premium
④ mgt problem
⑤ integration problem

38. reconstruction scheme

① fin recon 财务重组：融资结构发生变化
② portfolio recon 业务重组：业务发生变化

39. Money mkt的对冲方式

① 未来还钱（货币A还货币B）：A货币先投资出去，未来要多还钱（自己倒霉），所以现在就借多，所以汇率用小的，再用B货币拿钱/借钱（投资->换算->收回）
② 未来借钱（货币A借货币B）：A货币先借入，未来要少借钱（自己倒霉），所以现在就还少，所以用汇率大的，再用B货币还钱（借入->换算->还钱）
在mkt上的交易可以对冲未来的外汇风险（把未来可能要损失的钱在这期间先赚到），最后一步算得的结果是借出或拿到的本利和

40. 公式

  1. gearing ratio = debt/equity or debt/(debt+equity)
  2. current ratio = CA/CL
  3. quick ratio = (CA-inventory)/CL
  4. inventory turnover period = inventory/cost of sales * 365
  5. receivable collection period = TR/credit sales * 365
  6. payable collection period = TP/credit purchase * 365
  7. ROCE = PBIT/(equity+long term debt) * 100%
  8. gross profit margin = gross profit/sales * 100%
  9. asset turnover = sales/(equity+debt)
  10. EPS = PAT/no of shares
  11. diluted EPS = (net profit-优先股股利)/common shares
  12. P/E ratio = mkt price/EPS * 100%
  13. DPS = total dividend paid/no of shares
  14. dividend cover = PAT/total dividend paid
  15. dividend yield = DPS/mkt price * 100%
  16. interest cover = PBIT/fin cost
  17. ROE = (PAT-prefered divd paid)/equity * 100%