HKUST School of Business and Management
“I cannot see the question during class”
“what are the key points and concepts to note for the tax topic? Thank you”
See review slides from today.
“1. Could you quickly go over an example of how implicit tax rates impact yields?”
Step 1: An explicit tax increases demand for tax free returns (i.e. yields on a tax exempt bond).
Step 2: Increased demand for tax exempt bonds drives up their price and lowers their yield.
“2. If there is time, a refresher on organization form arbitrage and clientele form arbitrage would be nice. I would appreciate another real-world example of these two items to help reinforce the concepts.”
“What is clientele arbitrage?”
See previous slide, and the tax section of today’s review slides.
“How do we determine what values to use for the benchmark return and the asset return used to calculate the implicit tax rate?”
This is a great question, but beyond the scope of this course! We need to find a corporation that is similar to the municipality/country in question. For countries this is difficult, since there are rarely peer firms. But for municipalities and non-profits like airport authorities there are often often very similar companies.
“Since we would determine the investment for the different type of investors based off of the yield, what is the implicit tax rate actually used for?”
The most use of the implicit tax rate is to understand the impact of taxes on yields, i.e. how tax advantaged bonds (like government debt) allow their issuers to borrower at lower rates.
“What does it actually mean or would it be used in any calculation?”
We use this to understand the impact of taxes on both government cost of debt and on investor behavior. It does not change how we calculate returns, rather it explains why particular returns are what they are.
“As you mentioned you would be asking about the workings on excel and python, would you please provide a template or a format of how you would want the answers to be? should it include like formulas, or for example this cell should be deducted by another cell?”
Thiis is reviewed in the slides for this session and for lecture 6.
“Could you please explain the chapter about taxation once more? Especially the arbitrate part.”
Focus on the slides in this review session.
“I’m confused about the relationship between tax shields and real vs. financial assets. What is the decision logic behind using them? I need help understanding how this affects decision-making.”
“I would like to clarify more concept on tax, thank you.”
See the tax section of today’s review slides.
“Could you explain tax shield again?”
The depreciation tax shield is the present value of the reduction in tax payments afforded by the depreciation deduction.
“Do we need to memorize formula of SPDA and also the complex formula in the lecture 9 notes?”
You do not.
“I’m confused about the calculation of alternative savings, especially the SPDA part. Can you explain the formula again?”
You do not need this formula for the exam. The goal was to generate a set of examples with the attributes provided by the formula, but you do not need to use the formula to solve problems on the exam.
“cost functions”
See the video the lecture on cost functions that I posted on Canvas. As well as the lecture 6 and 12 review slides on this topic.
“cost estimation”
See the video the lecture on cost functions that I posted on Canvas. As well as the lecture 6 and 12 review slides on this topic.
“P3” (This is a cost estimation homework problem)
See the video lecture on cost estimation and the excel and python examples that are posted on Canvas.
“Are there any practice questions we can do?”
Yes. The homework problems are the source for the exam questions.
“Would it be possible to obtain more practices to better prepare for the examination?”
Yes. The homework problems are the source for the exam questions.
“Can you provide some sample questions?”
Yes. The homework problems are the source for the exam questions.
“For the midterm exam, should we focus more on understanding the theoretical concepts, or on practicing the practical problems?”
I would review the problems and the review slides for this session.
“Can professor provide any practice questions? Please clarify the exam coverage (eg. lecture 1 to lecture ?)”
Yes, see the review slides from this session. The homework problems are the source for the exam questions.
“Is there any practice questions for the mid term or any examples on the format of the questions as the homework are mostly in excel format and I would want some mental preparation for what to expect for the exams. Thank you! :D”
The exam questions will be adapted from the homework problems. You will not need to use excel on the exam, but you should be comfortable with the process of using exceli in the ways outlined in the second review session and this review session.
“Do we have a more detailed answer for the problems?”
I’m not sure what this question is asking. I have devoted entire lectures to going through the problems in detail.
“Will there be any sample questions for mid term?”
Yes. The homework problems are the source for the exam questions.
“Will there be questions as complex as the special electric case in the mid-term?”
No.
“How many questions will be based on lectures 7 to 11?”
All the information about this is covered in the review slides. I’m not going to provide more specific information about the number of questions on each topic.
“Does the midterm cover everything taught before Mar 24?”
No. The midterm will end with taxes.
“Will there be any questions that requires memorisation of long paragraphs?”
Disclaimer: I do not understand this question.
The only exam where I would ever do such a thing is an exam where I recited poetry, and this is not a poetry class.
“May I ask what is the format of the exam (ie give us a case question just like those assignment case questions)? thank you!”
See both review sessions (lecture 6 and lecture 12) for both of these.
“1. Midterm exam coverage
Through taxes. See the review slides for this session for more details.
2. Is the number of correct answers to each multiple choice question fixed?“
Yes. But I don’t understand this question.
“Exam format”
See review slides for this session.
“is mt going to cover lectures 1-5 excluding review lc 6?”
No. See review slides for this session. The midterm will end with taxes.
“What is the coverage of midterm and what question type would be included?”
See review slides for this session.
“May I ask what the scope is for the mid-term, from L1 to L? thanks”
See review slides for this session.
“which chapters will be covered for mid term?”
See review slides for this session.
“What type of questions are gonna be asked. I mean if it will be multiple questions or short answer or maybe even long answer?”
See review slides for this session.
“Will there any question related to equation which need to be calculated?”
I don’t understand this question, but you will not need a calculator for the exam, so calculations will be simple enough to do by hand.
“What will be covered.Will we required to write those python code”
The mid term will cover through the lectures on taxes. Please review the slides from lecture 6 and from this lecture.
“Are there any practice questions we can do?”
Yes. The homework problems are the source for the exam questions.
“Would it be possible to obtain more practices to better prepare for the examination?”
Yes. The homework problems are the source for the exam questions.
“Can you provide some sample questions?”
Yes. The homework problems are the source for the exam questions.
“All topics”
Time travel?
“No questions”
“no”
“Ok”
“.”
“Yes any”
“yes”
“Yes”
“n/a”