ACCA P4 Exam Tips:
ACCA P4 Advanced Financial Management Exam Tips for June 2015 session are given as follows by famous tuition providers
– 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.
Important area to cover include
Q1: We would expect section A questions to be mainly based on core syllabus areas such: project appraisal (often in an overseas context), business valuations (both are likely to include cost of capital calculations) and risk management (hedging).
Q2-4: Currency risk management, business re-organisation, real options.
Keep checking the ACCA website for articles in the lead up to exam, these are often tested.
– International investment appraisal using adjusted present values/net present values. Sensitivity analysis and capital rationing.
– Cost of capital using the principles of Modigliani and Miller prepositions or geared and ungeared betas.
– Hedging exchange rate or interest rate risk using futures, options and swaps.
– Mergers and acquisitions – valuation using free cash flows/P/E ratio method, cash offer or share exchange and regulations of takeovers.
– Capital reconstruction schemes – designing a capital reconstruction scheme or assessing the success of a given scheme.
– Option pricing theory. Real options, example, option to abandon, expand and delay. Valuation using the Black-Schole option pricing model.
– 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.
– Investment appraisal of investment in foreign country
– calculation of cost of capital to apply
– ethical considerations
– Foreign exchange risk management
– Written question on effects of a country leaving a common currency (such as Greece leaving the Euro)
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