So there is another thread (the credit enhancements thread- http://www.analystforum.com/phorums/read.php?12,1015187) where this is almost happening but i thought it was worth starting one so we get everyone who is interested… So far i’ve collated… - 2 types of credit enhancements for overcollateralization question - not certain of confidence interval for variance of bond questions but some think 3.68 - 8.5 for the residual dividend - Economies of scope was NOT a cause of improved margins (not sure i agree here) - Competition was LOW. herfindhal Index less than 1 (.8 i suppose) - Increase in profit pool by marketing beer to even women & children - Redistribution of Industry Value capture by Suppliers From memory the contango / normal contango backwardation question for us has the futures price > expected spot price but less than the current spot price. The first part implies normal contango and the second implies backwardation. I put normal contango but later decided it was probably backwardation as it cant be normal contango if it is not also contango? Thoughts? feel free to dispute add to this…
I think with the contango one (and only because I spoke to my colleague who remembers it clearer)…the solutions were a. contango b. normal contango c. normal backwardation Apparently, normal backwardation didn’t fit the bill, so it had to have been answer (b)… This is his opinion anyway…I put b but don’t have 100% confidence in it.
I am close to certain (as i can be this many days after the exam) that it said backwardation only… I remember being sure it was both backwardation and normal contango and checking ti several times in the exam (this is not to say i still didnt retard it up somehow and fail to read the question correctly…)
I’m pretty sure I remember normal backwardation…guess we’ll never know 
Mini, If that is the case, it means i got it correct and am happy. Good to go with your thoughts…
- Answer to HPR question was closest to 2.5%
normal backwardation…
zero Wrote: ------------------------------------------------------- > So there is another thread (the credit > enhancements thread- > http://www.analystforum.com/phorums/read.php?12,10 > 15187) where this is almost happening but i > thought it was worth starting one so we get > everyone who is interested… > > So far i’ve collated… > > - 2 types of credit enhancements for > overcollateralization question > - not certain of confidence interval for variance > of bond questions but some think 3.68 > - 8.5 for the residual dividend > - Economies of scope was NOT a cause of improved > margins (not sure i agree here) > - Competition was LOW. herfindhal Index less than > 1 (.8 i suppose) > - Increase in profit pool by marketing beer to > even women & children > - Redistribution of Industry Value capture by > Suppliers > > > From memory the contango / normal contango > backwardation question for us has the futures > price > expected spot price but less than the > current spot price. > > The first part implies normal contango and the > second implies backwardation. I put normal > contango but later decided it was probably > backwardation as it cant be normal contango if it > is not also contango? > > Thoughts? > > feel free to dispute add to this… I cannot exactly remember the one on the HHI, but I thought the answer given was that there is high competition and that’s what I thought given that the 5 firm concentration ratio was not too large (If I didnt remember wrongly was it 15% or 17%?) and the HHI was quite small? I thought the bigger the HHI the lesser the competition? And for the backwardation/normal contango/normal backwardaation question I chose normal contango… But I really am not sure about this and it’s really weird.
i got high competition a low hhi index and low concentratio ratio indicates a high level of competition…
sorry I also wrote whatever the answer was indicating competition was high - cant remember how it was phrased now…
zero Wrote: ------------------------------------------------------- > sorry I also wrote whatever the answer was > indicating competition was high - cant remember > how it was phrased now… i dont exactly remember the phrasing but yeah, I chose that option also. I cant remember the one on economies of scope/scale/learning curve. In another forum there is a heated debate on that so to be safe I’d say -1 for me on that for now.
the answer was learning curve…it is fair to assume that beer companies which are market leaders have already reached their peak as far as learning how to make the product is concerned…economices of scope will bring new effeciencies in production…
gross irr question?? i got +4%…ne1 remember wat they got?
economics of scale is answer according to me bcoz fixed cost didnt change …so economics of scale didnt contribute anythng to it
rakesh07 Wrote: ------------------------------------------------------- > gross irr question?? i got +4%…ne1 remember wat > they got? i had no clue how to solve this so i just made a wild guess : -14%
Gross IRR was something like 12%-14% Economies of Scope was ODD man out FOR SURE! Scope means Diversity of products helping firm due to spilover effect. However, here there ws ONLY one product! BEER! (I love it :D) Experience curve is correct as producing large quantities helps gain experience. It’s related to economies of scale. Herfindhal Index was .8 (1-1.8 indicates moderate competition, >1.8 means HIGH COMPETETION), so here they were trying to trick us! They just said that the industry was becoming more competitive due to consolidation, ie increase in competition, HOWEVER, it was STILL below the THRESHOLD of .1
it was high level of competition indeed because of a lower HHI
Oops! Shit…wat a silly mistake. I guess i am going crazy! HIGH LEVEL of competition. Right.
There was a question on least contraction risk. The options were A,B1 and B2. Anybody remembers?
oh that contraction risk question… Vaguely remember putting A but i may be getting confused… IRR question i got gross IRR of 12% and didnt know to change it from that. Congratulations me. There was also a question in fixed income about different tranches being more stable or something due to some type of FACS or NACS calss or something… cant remember the answer…