mark to market projected income

CFA Level II
#1

what is mark to market projected income… Qn in BSAS… where 250,000 shares of A as classified as trading and 1 million shares of B is classified as AFS… the questions is what is mark to market projected income. I never of such as term… dividends for A: 250,000 and b: 900,000 increases in values of stock prices: A =.75 per share and .05 per share. thx

#2

mark to market return = divs + coupons + change in MVA divs = 900k + 250k MVA (trading) = .75*250k MVA (AFS) = .05*1000k we need a change in MVA from year to year. is there anymore info about the next or previous years change in stock price?

#3

Should it be Divd+realised gains + Unrealized gain on Trading ? In that case i would get (900+250) + 0 + .75*250 = 1337.5 k . I’m doing that because Trading Unrealized gains/losses are marked to market in IS but AFS gains/losses are not.

#4

realized gains = 0 unrealized gains = change in MVA the change has to be over 1 year. that change thats mentioned doesn’t have a time frame

#5

i would think trading security you’d take the unrealized gain of 250k x .75 = 187,500 plus the divs of 250k = 437,500 the AFS security on income you would only get the dividends, not the unrealized gains, so just the 900k so 1,337,500 like bhaiyyu got

#6

Pretty sure that uneven the unrealized gains on the AFS go into the calculation of the return even though they aren’t recognized on the IS. Not positive though…

#7

the answer that BSAS computed was A (trading) B (available-for-sale) Total Number of shares acquired 250,000 1,000,000 Percentage ownership (250/2,000) 12.5% (1,000/30,000) 3.33% Total dividend distributions 250,000 900,000 x ownership share 12.5% 3.33% Dividend Income 31,250 30,000 61,250 Share price appreciation (8.25- 7.50) 0.75 (4.05 – 4.00) $ 0.05 x no. of shares 250,000 1,000,000 187,500 50,000 237,500 Total mark-to-market income $ 298,750 But for AFS… we should be taken the price appreciation in income… but through equity… is that right…?

#8

The unrealized gains go through other comprehensive income for AFS. But this really doesn’t have to do with that. You are just calculating your return on your passive investments. Like all returns it take dividends and capital gains into consideration.

#9

I agree with aladak, but why the change has to be over 1 year?