AFM Textbook Syllabus

A1a. Purpose of Financial Management

A1bc/A2c. Key areas of responsibility for the financial manager

A2a. Ratios and Strategy

A2a. Ratio limitations

A2b. Gearing considerations

A2b. Sources of Finance

A2d. Risk Management Process

A2e. Identifying Risk

A2e. Business Risk

A2fg. Risk mitigation, hedging and diversification strategies

A2h. Behavioural Finance

A3ab. Fundamental Principles

A3cd. Ethical issues in financial management

A3e. Agency Relationship

A3e. Transaction Cost Theory

A3f. Governance structures and policies

A3g. Social and Environmental Issues

A4ab. Free trade and the management of barriers to trade

A4c. The World Trade Organisation (WTO)

A4c. The management of international finance

A4d. The role of international financial institutions

A4d. The Euromarkets

A4e. Multinational financial planning issues

A4f. The European Sovereign Debt crisis

A4e. The global debt problem

A4f. Dark Pool Trading

A4f. Free movement of Capital

A4g. Developments

A5a. Stock exchanges

A5aii. The mobility of capital across borders

A5a. Sources of finance for foreign trade

A6a. Dividends policy

A6ai. The corporation’s short- and long-term reinvestment strategy

A6a. Alternatives to a cash dividend

A6a. The corporate tax regime within the host jurisdiction

A6c. Transfer Pricing

B1a. NPV

B1aiii. Capital rationing - Single period- Types

B1aiii. Capital rationing & divisible projects

B1aiii. Capital rationing & INdivisible projects

B1aiii. Capital rationing - Multi-period

B1aiv. Risk & Uncertainty basics

B1aiv. Sensitivity Analysis

B1aiv. Probability analysis

B1av/vi. Payback method

B1av/vi. Adjusted Payback

B1bi. Monte Carlo simulation

B1bii. Project value at risk

B1c. Internal Rate of Return

B1c. MIRR

B2a. Pricing of options

B2a. Black-Scholes Option Pricing (BSOP) model

B2b. Real options in decision making

B2b. NPV and Real Options

B2c. Option to delay or defer

B2c. Option to abandon

B2c. Option to expand

B3a. Debt or Equity?

Long term finance

B3a. Securitisation

B3a. Islamic Finance - Introduction

B3a. Mudaraba (equity), Sukuk (debt) & Musharaka (JV)

B3a. Ijara (leasing) and Murabaha (credit)

B3b. Basic Idea - IF

B3b. Advantages of Islamic finance

B3b. Disadvantages of Islamic finance

B3a. Initial Coin Offering

B3e. Duration (Macauley duration)

B3g. Credit spread

Gearing drift

B3h. Capital structure theories

B3h. Modigliani and Miller propositions

B3h. Static trade­off theory

B3h. Agency effects

B3i. Adjusted present value

Green Finance

B4a. Valuations - Introduction

B4a. Market Capitalisation

B4a/C2ci. Asset Based Valuations

B4a/C2c. Using PE ratio

B4a. Earnings Yield

B4a. Dividend Valuation

B4a/C2c. Discounted Cashflows

B4a/C2b. Discounted Free cash flow basis

B4bc. Free cash flows

B4bc. Free cash flow to equity

B4de. BSOP and default risk

B5a. International investment and financing decisions

B5b. Forecast project or organisation FCF from overseas projects

B5ce. Remission of funds

Cost of Capital - Basics

Calculating the WACC

Dividend Valuation Model

capm

capm continued

DVM or CAPM?

Ungearing & Regearing

Redeemable debt

Irredeemable, preference shares and Bank loans

Convertible Debt

WACC - Putting it all Together

WACC calculated using Asset Beta

WACC calculated using ungeared Ke

C1a. Reasons for and against acquisitions, mergers and divestments

C1b. Strategy Development

C1c. Acquisitions and mergers as a method of corporate expansion

C1d. High failure rate of acquisitions

C1e. Synergy

C1f. Reverse Takeovers

C2a. The problem of overvaluation

C2d. The three acquisition types

C2e. High growth start-ups

C3a. Regulation of takeovers

C3b. The conduct of a takeover

C4ac. Forms of consideration

C4ab. Methods of raising cash

C4b. Cash consideration

C4b. Share exchange

C4b. Earn-out arrangements

D1. Capital reconstruction schemes

D1a. General guidelines in reconstruction

D2a. Unbundling

D2ab. Divestment

D2ab. Spin-offs/demergers

D2ab. Sell-offs

D2c. Management buy-out (MBO) and buy-in

D2ab. Share repurchase

D2ab. Going private

E1a. The role of the treasury management function

E1a. Protection against transaction risks

E1b. Exchange and OTC

E2b. Futures

E1biv. Risks

E1a/E2a/B5d. Types of foreign currency risk

E2b. Predicting Exchange Rates

E2b. Understanding Exchange Rates

E2b. Forward Rates

E2b. Money Market Hedges - payment

E2b. Money Market Hedge - Receipt

E2b. Currency Futures

E2b. Currency Futures - calculation

E2b. Currency Swaps

E2b. Currency Options

E2b. Options - calculations

E2c. Netting

E2c. Matching

E3a. Interest Rate Risk

E3a. Interest Rate - Forwards & Futures

E3a. Interest rate futures

LIBOR and LIBID

E3a. Forward rate agreements (FRA)

E3a. FRAs - calculation

E3a. Interest Options and Swaps

E3a. Options on interest rate futures - calculation

E3a. Interest rate swaps - examples

E3a. Interest rate collar

Market Value of Bonds

Market value of bonds - calculation

Valuing bonds based on the yield curve