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考前冲刺 | ACCA FMF9十大高频考点总结
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2022/06/07
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最近快考试了,F9文字题核心考点还有哪些没复习到!?

睿睿给大家双手奉上,F9十大高频文字题答案!祝大家好运!!

Question 1:

Explain ways in which the directors can be encouraged to achieve the objectives of maximization of shareholder wealth?

Answer:

As agents, the directors may not always act in ways increasing the wealth of shareholders, which is called the agency problem. To overcome this problem, directors can be encouraged to achieve the objective of maximizing shareholder wealth through managerial reward schemes and throughregulatory requirements.

Managerial reward schemes

Managerial reward schemes includes performance-related pay and share option schemes. Through these methods, the goals of shareholders and directors may increase in congruence.

(1) Performance-related pay links part of directors’ remuneration to certain corporate performance, such as levels of profit or earnings per share. One problem here is if inappropriate criteria is chosen, it may lead to managers’ self-interest behavior, for example, focusing on short-term performance while neglecting the longer term.

(2) Share option schemes bring the goals of shareholders and directors closer together. Share options allow directors to purchase shares at a specified price on a specified future date, encouraging them to make decisions which exert an upward pressure on share prices. Unfortunately, a general increase in share prices can lead to directors being rewarded for poor performance, while a general decrease in share prices can lead to managers not being rewarded for good performance.

Regulatory requirements

Regulatory requirements can be imposed through corporate governance codes of best practice and stock market listing regulations.

(1) Corporate governance codes of best practice, such as the UK Corporate Governance Code, seek to reduce corporate risk and increase corporate accountability. In these codes, it suggests independent perspective, for example, appointing non-executive directors to create a balanced board of directors, or appointing non-executive directors to remuneration committees and audit committees.

(2) Stock exchange listing regulations can place obligations on directors to manage companies in appropriate ways, for example, listing regulations may require companies to publish regular financial reports, to provide detailed information on directorial rewards and so on.


Question 2:

Discuss techniques in managing trade receivables.

Answer:

The concept of credit policy can be introduced here. It is known that such policy can be divided into THREE steps:

Assessing creditworthiness

Assessing creditworthiness of customers, especially new customers, should be the first step of company’s receivable management. And there are different sources to collect such information. For example:

- trade references

- bank references

- credit reference agencies

- published accounts etc.

Managing accounts receivable

Company needs to make sure that its credit customers follow the terms of trade agreed before. Key information here will be the number of overdue accounts and the degree of lateness of amounts outstanding. An aged receivables analysis can provide this information. The company will therefore remind them when payment is due and regularly send out statements of account.

Collecting amounts owing

If an account becomes overdue, company must make sure it is followed up quickly. Credit control staff must assess whether payment is likely to be forthcoming and if not, a clear policy must be in place on further steps to take.

These further steps might include legal action and using the services of a debt collection agency.

Additionally, some other tools can also be adopted to boost management of receivable.

Offering early settlement discounts

This will offer a reduction in the outstanding amount (the discount) in exchange for settlement before the due date. Company must weigh the benefit of offering such an early settlement discount against the benefit expected to arise from its use by credit customers.

Using factoring

Either on a recourse or non- recourse basis. factors could offer assistance in credit assessment, managing accounts receivable and collecting amounts owing. Additionally, the factor could advance a percentage of the face value of outstanding invoices for a fee.


Question 3:

Discuss the difference between WC financing and investment policy.

Answer:

(a) Working capital investment policy is concerned with the level of investment compared with another. Working capital financing policy is concerned with the relative proportions of short-term and long-term finance used by a company.

(b) Working capital financing policy uses an analysis of current assets into permanent current assets and fluctuating current assets. Working capital investment policy does not require this analysis.

(c) Working capital financing policy relies on the matching principle, which is not used by working capital investment policy. The matching principle holds that long-term assets should be financed from a longterm source of finance. Non-current assets and permanent current assets should therefore be financed from a long-term source, such as equity finance or bond finance, while fluctuating current assets should be financed from a short-term source, such as an overdraft or a short-term bank loan.

(d) Both working capital investment policy and working capital financing policy use the terms conservative, moderate and aggressive.

- In investment policy, the terms are used to indicate the comparative level of investment in current assets on an inter-company basis. One company has a more aggressive approach compared to another company if it has a lower level of investment in current assets, and vice versa for a conservative approach to working capital investment policy.

- In working capital financing policy, the terms are used to indicate the way in which fluctuating current assets and permanent current assets are matched to short-term and long-term finance sources.

(e) Overall, therefore, it can be said that while working capital investment policy and working capital financing policy use similar terminology, the two policies are very different in terms of their meaning and application.


Question 4:

Discuss the difference between a nominal and real approach to calculate NPV?

Answer:

There are two aspects in respect of main difference between nominal and real approach, the first one is cash flow, while another one is cost of capital.

Nominal approach discounts nominal cash flows with a nominal cost of capital. This ‘nominal’ means adjusted by certain inflation rates, that is different project cash flows are inflated by different inflation rates in order to generate nominal project cash flows.

On the other hand, real approach discounts real cash flows with a real cost of capital. This ‘real’ means that there is no inflation taken into consideration, no matter in respect of cash flow or cost of capital.

Additionally, real cost of capital can be converted to nominal one, using the Fisher equation: (1 + real discount rate) x (1 + inflation rate) = (1 + nominal discount rate) .

Another important thing to be noted is that investment’s NPV does not depend on choice of real or nominal approach of calculation. Both approaches give the same net present value.


Question 5:

Critically discuss FOUR reasons why NPV is regarded as superior to IRR as an investment appraisal technique.

Answer:

1)NPV and shareholder wealth

The NPV of a proposed project, if calculated at an appropriate cost of capital, is equal to the increase in shareholder wealth. In this way NPV is directly linked to financial objective of companies.

IRR calculates the rate of return on projects, and although this can show the attractiveness of the project to shareholders, it does not measure the absolute increase in wealth which the project offers.

2)Absolute measure

NPV figures out absolute increases in wealth and thus can be used to compare projects of different sizes. However, IRR looks at relative rates of return and ignores relative size of compared projects.

3)Non-conventional cash flows

In situations involving multiple reversals in project cash flows, it is possible that the IRR method may produce multiple IRRs (that is, there can be more than one interest rate which would produce an NPV of zero). If decision-makers are unaware of such situations, they could make wrong decisions.

4)Changes in cost of capital

NPV can be used in situations where the cost of capital changes from year to year. Although IRR can be calculated in these circumstances, it can be difficult to make accept or reject decisions as it is difficult to know which cost of capital to compare it with.


Question 6:

Explain and discuss the relationship between systematic and unsystematic risk

Answer:

Holding a range of different investments is known as portfolio diversification. It is known that total risk can be reduced under the diversification, however, there does exist a limit. The risk that cannot be removed by portfolio diversification is called systematic risk. It represents risk relating to the financial system as a whole that cannot be avoided by any company.

The risk that can be removed through portfolio diversification is called unsystematic risk, as it relates to specific companies in which investments are made.

Additionally, systematic risk contains both business risk and financial risk. A company with no debt finance faces business risk alone, while a company with both equity and debt finance faces both business risk and financial risk.


Question 7:

Discuss how the capital asset pricing model(CAPM) can assist companies in making better investment decision with respect to its new product launch.

Answer:

The CAPM can provide a project-specific discount rate.

Usually speaking, proxy company will reflect similar business risk of the project compared with investing company. However, proxy company's equity beta will additionally reflect the systematic financial risk of the proxy company, If the proxy company is geared.

Therefore, the proxy equity beta should be ungeared to remove the effect to give an asset beta which solely reflects the business risk of the investment project.

And then this asset beta should be regeared to give a regeared equity beta which reflects the financial risk of the investing company.

At last the regeared equity beta can be inserted into the CAPM formula to provide a project-specific cost of equity.

The project-specific cost of equity can be included in a project-specific WACC. Using the project-specific WACC in appraising an investment project will lead to a better investment decision than using the current WACC as the discount rate, as the current WACC does not reflect the risk of the investment project.


Question 8:

Discuss methods of adjusting for risk and uncertainty in investment appraisal

Answer:

Probability analysis

Probability analysis is suitable when probabilities for each project outcome can be assessed and assigned. A range of project NPVs can then be calculated, as well as the mean NPV associated with repeating the investment project many times. The worst and best outcomes and their probabilities, the most likely outcome and its probability and the probability of a negative NPV can also be calculated. Investment decisions could then be based on the risk profile of the investment project, rather than simply on the NPV decision rule.

Sensitivity analysis

This technique looks at the effect on the NPV of an investment project to changes in project variables. It calculates the percentage change in these variables which can make NPV to zero.

Calculation of these sensitives on critical project variables indicates aspects where managers may need to focus on. However, as sensitivity analysis does not consider risk as measured by probabilities, it can be argued that it is not really a way of considering risk in investment appraisal at all.

Adjusted payback

Payback period can be used to adjust for risk and uncertainty in investment appraisal by using discounted cash flows. Discounted payback adjusts for risk in investment appraisal in that risk is reflected by the discount rate employed.

Simulation

Simulation is a computer-based method of evaluating an investment project whereby the probability distributions associated with individual project variables and interdependence between project variables are incorporated


Question 9:

Discuss the reasons why investment finance may be limited, even when a company has attractive investment opportunities available to it?

Answer:

Investment finance may be limited due to ‘hard capital rationing’, and this concept is related to some external factors, for example,investors‘ unwillingness towards the company, which may result from its high financial risk or lack of security. Sometimes, if the whole economy is at the stage of recession or depression, investors' confidence may be affected adversely, which also contributes to the problem of hard capital rationing.

On the other hand, ‘soft capital rationing’ should be taken into consideration too, which is about internal factors affecting investment financing. For instance, managers and directors of the company may choose not accept external finance opportunity even there is such chance. In reality, they may do so to avoid too quick expansion or dilution of control(if chance of finance is kind of equity).


Question 10:

咱就是说如果要是有个大题让你写股息发放与否之类的考量,那你就结合题意写,基本有三个方面:

1)If shareholders prefer cash received right now rather than potential capital gain in the future, paying out dividends regularly is a necessary method to maintain relationship with them.(一鸟在手理论的内容)

2)If dividend policy is quite constant in the past, and most of its existing shareholders are accustomed to that, then sudden change of such policy may hurt those shareholders’ habit. What is worse, they may consider to withdraw their capital and re-invest other companies which can satisfy their requirements of dividend.(追随者效应的内容)

3)If company, in a semi-strong form efficient capital market, wants to send a ‘signal’ to the market and investors, dividend policy should match with the ‘signal’. For example, increasing payout ratio indicates a prosperous future, while zero dividend is kind of bad news.(信号理论)


这十个问题是频率最高的几个,祝大家一路pass!!

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