ACCA P4 Exam Tips December 2014

Following are the Exam Tips (Important Topics) of ACCA P4 Paper for December 2014 attempt that may appear in exams according to expert tutors and 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


– Discounted Cash flow
– 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.

First Institution

– 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.
Section B: 
– 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.