Yesterday we saw (or the ACCA AFM students saw) the latest set of ACCA AFM questions. I can kick off this blog by stating that the 3 expected syllabus areas were the main theme for all yesterday.

These ‘usual suspects’ were:

✅ Investment Appraisal

✅ Business Valuations

✅ Risk Management

So what was tested & where ?

Based upon the detailed feedback provided to me from my cohort of ACCA AFM students, this is a summary of what was tested.

SECTION A

Q1 FX NPV

All students faced this in Q1. However, there were several versions of this question and what I have listed below, the main topics tested in all versions of this question.

Standard FX NPV

NPV & Capital Rationing*

Assumptions

Risks re FX investment

Factors re L/T Finance Strategy

IMF funding

QE

NPV of cash flows in foreign country

NPV of cash flows in home country

NPV if they decide to use debt finance

Transfer Pricing issues

Discussion on PPPT

*Capital Rationing – I was so glad that 2 weeks before the exam, I added this section to my revision & VEK courses given there are no past published past questions on this topic.

SECTION B

Q2 Business Valuations

All students faced this topic in Section B.

However, there were several versions of this question and what I have listed below, the main topics tested in all versions of this question.

Pre & Post Valuations

Revised WACC – post acquisition

Gain to S/H

Issue re majority s/h not wanting to sell

Purchase consideration – cash or shares

P/E valuation

FCF Co & perpetuity

Comparison to benchmark value

Q3 Risk Management

Here there were was some variety.

I had a few of my cohort had this:

Ints Rate Risk Management

Loan

FRA, Future & SWAP

FRA & Swap – certainty ?

Basis Risk – discussion

However the majority of students had a various versions of this:

Forex Risk Management

FX Receipt

Invoicing in home currency

Forwards, Futures & Options*

Best Option Rate

Treasury polices

*unusually one question told student not to use FC for Futures & Options under hedge.

Exam Tips – Accurate

Yes, to some extent:

1. Business Valuation – pre & post valuations. purchase consideration. assumptions. regulation of takeovers.

2. FX Risk Management – fx receipt. futures & options. treasury department.

3. Interest Rate Risk Management