– Currency hedging and interest rate hedging – read the two recent articles published on the ACCA website
– Black Scholes option pricing model
– Business valuation, especially using the free cash flow to firm methodology
– Cost of capital calculations (including asset and equity betas) and Adjusted Present Value
– Business Valuations
– Risk Management – Interest Rate
– Business reorganisation
– Cost of capital – cost of debit and credit spreads
– Investment appraisal using modified internal rate of return and adjusted present value or net present value.
– Mergers and acquisitions – valuation using free cash flows; cash or share exchange as purchase consideration. Discussing defensive tactics and regulations of takeovers.
– Cost of capital using the principles of Modigliani and Miller prepositions or geared and ungeared betas.
– Hedging exchange rate or interest rate risk using forward contract, futures, options and swaps.
– Option pricing theory.
– Valuation of company using the Black-Scholes option pricing model and delta hedge.
– Capital reconstruction schemes – designing a capital reconstruction scheme or assessing the success of a given scheme.
– International investment appraisal techniques focusing on risk management tools such as value at risk.
– Impact on WACC following hedging of interest rate risk.
– Company valuation based scenario, possible MBO finance to structure.
– Adjusted present value with link to real options and Black Scholes option pricing model.
Section A: Report involving the valuation of a business using free cash flows / calculation of WACC including ungearing and regearing betas.
– Interest rate risk management
– Macauely duration
– Value of risk
– Foreign project appraisal, either NPV or APV.
– Company reorganisation, either a struggling company and a plan for reconstruction, or a divestment.
– Interest rate risk, perhaps including interest rate collars.
– Mergers and acquisitions, including how to pay for the target company.
– Foreign exchange rate risk, perhaps including determination of exchange rates.