2019 CFA practice IFT quizzes session solutions
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2019 CFA practice IFT quizzes session solutions
^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFac 2019 CFA practice IFT quizzes session solutions ctors favoring a sale 1.In a sale. Smith will not be involved in the day-to-day owning and running of the business and will have more time to spend with his grandchildren 2.A sale to a strategic buyer would potentially realize the highest current proceeds. A sale now would avoid the expected higher 2019 CFA practice IFT quizzes session solutions tax.Recapitalization1Smith would retain his identity as CEO of his firm 2.A recapitalization would allow expansion to realize a major increase in earn2019 CFA practice IFT quizzes session solutions
ings and value of the company within a relatively short time.Calculate the after-tax amount monetized by the recapitalization and Smith's value of the^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFac 2019 CFA practice IFT quizzes session solutions illion.The value of Smith's 15% stake = S6.75 million before any valuation discounts and lack of control or limited marketability of shares.What is primary capital? Evaluate whether the amount monetized combined with Smith’s existing portfolio meets his requirement for S36 million in core capital. J 2019 CFA practice IFT quizzes session solutions ustify your answer.Primary capital is the sum of the personal risk bucket and the market risk bucket.Yes. the recapitalization will meet Smith's prima2019 CFA practice IFT quizzes session solutions
ry capital needsJustificationCopyright e IFT. All rights leseivedwww.ift.worldPage 1^JFTLevel III ss 5 - Essay Ọuiz 1 SolutionPrimary Capital needsPer^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFac 2019 CFA practice IFT quizzes session solutions l =11+ S26.5125 million =S37.5125 millionBriefly describe three tools that are used to monetize a concentrated position in a publicly traded common stock. Identify one advantage for each tool other than the fact that an immediate tax event is avoided. The same advantage should not be repeated.ToolDe 2019 CFA practice IFT quizzes session solutions scriptionAdvantageShort sale against the boxThe investor takes a short position against the security in which he has a concentrated holding.Lower cost2019 CFA practice IFT quizzes session solutions
compared to other hedging strategies because derivatives are not used here.Total return equity swapThe investor agrees to pay a dealer any appreciati^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFac 2019 CFA practice IFT quizzes session solutions alue of the shares plus an agreed upon interest rate.Concentrated asset position is completely hedged and so investor can borrow against the position with a high loan-to-value ratio.Forward conversion with optionsThis strategy involves the construction of a synthetic short forward position against t 2019 CFA practice IFT quizzes session solutions he asset held long. (The payoff of a short forward position is identical to the payoff of a long put and a short call on the same underlying asset.)Th2019 CFA practice IFT quizzes session solutions
is strategy can be executed using exchange-traded options which is more cost effective than engaging with a dealer.Copyright e IFT. All rights reserve^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFac 2019 CFA practice IFT quizzes session solutions me Leighton founded a computer software company. When the company went public. Leighton became wealthy. He now wishes to start the Leighton Foundation to support social causes around the world. Leighton wants the Foundation to make contributions to these causes in perpetuity.The Foundation will be a 2019 CFA practice IFT quizzes session solutions tax-exempt entity. Leighton makes an initial gift to the Foundation of euro 200 million on 1 January of Year 1. In addition. Leighton intends to make2019 CFA practice IFT quizzes session solutions
ongoing annual contributions to the Foundation of euro 3 million on I January of each subsequent year. The Foundation will make a one-time distributi^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFac 2019 CFA practice IFT quizzes session solutions ion.Beginning in Year 2. the Foundation will have an annual spending requirement of 4% of the market value of its portfolio at the end of the preceding year. The annual contributions from the Foundation will be used to cover a portion of the operating expenses. The expected inflation rale is 6.5% pe 2019 CFA practice IFT quizzes session solutions r year.^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFac^JFTLevel III ss 5 - Essay Quiz 1 SolutionDiscuss two factors each that favor a strategic buyer and a recapitalization.Type of Sale Strategic BuyerFacGọi ngay
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