F9 revision(ACCA考试F9考前复习整理).docVIP

Flash cards answer: Set 1 Soft capital rationing The company itself limits the amount that it is prepared to borrow. Hard capital rationing When capital availability is limited by the amount that the lender is prepared to lend Capital rationing Capital rationing is the situation where there is a limit on the amount of capital available for investment. Real cost of capital? Real term does not= Actual term Real cost of capital is the cost that ignores any inflation Nominal (Actual) cost of capital is the cost after inflation adjustment. Sunk cost A sunk cost is the cost that has already been incurred and does not change as a result of the investment decision. Thus, a sunk cost is an irrelevant cost. 6. Payback period Payback period is the years it takes, in cash terms, to recover the initial investment. List 3 reasons for a company to hold cash Transaction motive Precautionary motive Speculative motive Invoice discounting Invoice discounting is where a particular invoice is used as a security for a loan. Set 2 Scrip dividend 股票股利 Scrip dividend is where the company allows its shareholders to take new issued shares rather than cash as dividends. MM with tax WACC with the change of gearing WACC would fall. What is convertible bond? Debt borrowing when on the date of repayment, the investors is given the choice of cash or a fixed amount of shares in the company. Differences on asset beta and equity beta Asset beta measures the business risk of the company; equity beta measures the risk of a share in the company, including risk from any gearing. Systematic risk?Unsystematic risk Systematic risk is the risk due to general economic factor. It exists in all investments but is different in various business sectors. It can not be diversified away. IRG IRG is the maximum interest rate of a loan is set now for a loan starting in a future date. Conservative funding/ WC management strategy Conservative WC strategy: Matching principle. Permanent CA and non-current assets are finan