So yesterday (Friday 8th December) was the ACCA AFM December 2023 exams. So what came up ?

Firstly, the analysis below is a summary of the feedback from students who studied on my ACCA AFM Online Courses. It is as factually accurate as memories allow. I have not seen the exam questions. However, I will give my opinion on what I the likely minimum mark will be per question for well prepared student.

Secondly, the references made are to my revision course covered on my December 2023 course.

As in the past there was not a single exam but several exam questions used across the exam day. Let’s start with the “Q1’s”.

The first of these was on corporate reconstruction involving the sale of a declining division. The initial theory part was on determining an acceptable level of gearing.

The calculations required restating the SOFP and revised share price after the sale and an equity for debt swap.

Report discussion was on assumptions as well as how the reconstruction affected the shareholders and bond holders.

ESG appeared for the first time relating to the ethical aspect of employee redundancies.

(This question was covered in revision session 6).

I would expect an able candidate to get a minimum of 28/50.

The other Q1 was based upon business valuations. The was a range of specified values relating to an unbundled part of the business.

Net assets, P/E, DVM & Free Cash Flow methods were all required.

The written covered discussion of each and related assumptions.

(This question was covered in revision session 5).

I would expect an able candidate to get a minimum of 29/50.

Let’s turn our attention to the 4 x Section B questions starting with risk management.

Interest rate hedging was one of these. Two hedges. Using sell futures on a loan and a call option a deposit.

Discussions on whether to hedge or not as well as how risk management affects shareholders.

(This question was covered in revision session 3).

I would expect an able candidate to get a minimum of 19/25.

The other risk management question was on FX risk. It was in receipt.

The two hedges were forwards and futures – the latter requiring the calculation of lock in rate using the standard trend method. That rate was needed to compute the number of contracts as well as to evaluate the hedge.

Margin accounts were also tested by way of calculation relating to the maintenance margin.

Discussion on treasury department closed off this question.

(This question was covered in revision session 4).

I would expect an able candidate to get a minimum of 19/25.

Last but not least the advanced investment appraisal questions were as follows.

APV was the first of these. Students given the project FCF’s but they were incorrectly discounted at WACC. They had to be converted into the base case NPV using the Kei.

Then two options for finance

1 – subsidised loan for $4m and other $3.5m from rights issue

2. Equal repayment loan

Comments were required on the above as well as political issues relating to the project.

(This question was covered in revision session 2).

I would expect an able candidate to get a minimum of 17/25.

The other question covered appraising a project using NPV,MIRR (IRR given),Duration & VaR.

Had to discuss the merits of each above as well as other issues relating to investment appraisal.

(This question was covered in revision session 2).

I would expect an able candidate to get a minimum of 18/25.