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Strategic Financial Management (SFM) CMA Final Group 3

Syllabus

SECTION A: INVESTMENT DECISIONS [25%]
1. Investment Decisions, Project Planning and Control - 10%
  • Measuring Cash Flows, Discounted Cash Flow Technique for Project Evaluation
  • NPV and IRR - Conflict and Resolution, The Modified Internal Rate of Return (MIRR), Comparing Projects with Unequal Lives, The Concept of Abandonment Value, Modified Accelerated Cost Recovery System (MACRS)
  • Inflation Adjusted Cash Flow Forecasting in Capital Budgeting
  • Capital Rationing for Divisible and Non – divisible Projects (with Application of Integer Programming)
  • Social Cost Benefit Analysis
2. Evaluation of Risky Proposals for Investment Decisions - 10%
  • Risk Analysis in Capital Budgeting - Certainty Equivalent Approach, Risk Adjusted Discount Rate, Expected NPV, Standard Deviation of NPV and Use of Normal Distribution, Decision Tree Analysis, Options in Capital Budgeting
  • Sensitivity Analysis
  • Scenario Analysis
  • Monte Carlo Simulation
3. Leasing Decisions - 2.5%
  • Lease Financing – Evaluation of Lease vs. Buy Options
  • Break-Even Lease Rental Determination and Implicit Rate
  • Cross Border Leasing, Sale and Lease Back
4. Securitization - 2.5%
  • Definition and Concept and Benefits of Securitization
  • Participants in Securitization
  • Mechanism and Problems of Securitization
  • Securitization Instruments

SECTION B: SECURITY ANALYSIS & PORTFOLIO MANAGEMENT [35%]
5. Introduction - 5%
  • Fundamental Analysis
  • Technical Analysis
6. Equity and Bond Valuation and Evaluation of Performance - 7.5%
  • Equity Valuation - Discounted Cash Flow Based Valuation, Relative Valuation using Multiples and Weights
  • Bond Valuation - Prices & Yields
7. Mutual Funds - 7.5%
  • Meaning, Advantages and Disadvantages, Structure and Types
  • Regulations
  • Computation of NAV
  • Evaluation of Performance and Movements in Security Values and NAVs of Mutual Funds for Investment Decisions: Perspective of AUM Managers and Individual Investors
  • ETF, REIT, InvIT
8. Portfolio Theory and Practice - 3.8%
  • Portfolio Return and Risk, Systematic and Unsystematic Risk, Diversification strategies (Naïve vs the Markowitz Model)
  • Optimal Portfolio, Efficient Frontier, Capital Market Line
  • Principles of Asset Allocation, Active and Passive Asset Allocation
9. Asset Pricing Theories - 3.8%
  • Single Factor and Multifactor Asset Pricing Theories: CAPM and APT
  • Concepts and Applications (including Levered Beta and Unlevered Beta)
10. Portfolio Performance Evaluation and Portfolio Revision - 3.8%
  • Conventional Performance Evaluation
  • Market Timing and Style Analysis
11. Efficient Market Hypothesis - 3.8%
  • Definition
  • Forms of Market Efficiency
  • Implications

SECTION C: FINANCIAL RISK MANAGEMENT [20%]
12. Risks in Financial Market - 10%
13. Financial Derivatives – Instruments for Risk Management - 10%
  • Introduction to Financial Derivatives
  • Forward and Futures – Meaning and Difference, Pricing, Stock Futures, Index based Futures, Hedging through Futures
  • Options
    • Meaning, Features and Types of Options, Option vs. Forward and Futures, Profitability of Option, Profit Profile of Buyer and Seller, Value of Option, Determination of Option Premium
    • Option Strategies
    • Put-Call Parity Relationship, Valuation of Options using Binomial Tree Approach and Black-Scholes Model, The Greeks
  • Swaps
    • Meaning, Features, Types, Benefits of Swaps
    • Interest Rate Swaps, Credit Default Swaps
  • Interest Rate Derivatives – Forward Rate Agreement, Interest Rate Futures and Options, Caps, Floors and Collars

SECTION D: INTERNATIONAL FINANCIAL MANAGEMENT [15%]
14. The International Financial Environment - 5%
  • International Financial Institutions and Markets
  • Sources of Foreign Currency
15. Foreign Exchange Market - 5%
  • Introduction – Structure of Foreign Exchange Market
  • Foreign Exchange Rate – Meaning, Determinants, Equilibrium Exchange Rate, Exchange Rate Quotations – Meaning, Direct vs. Indirect Quote, American vs. European Quote, Bid-Ask Rate and Spread, Cross Rates
  • Segments of Foreign Exchange Market – Spot Market (including two and three-point Arbitrage), Forward Market
  • Foreign Currency Derivatives
    • Currency Forwards
    • Currency Futures
    • Currency Options
    • Currency Swaps
  • Parity Relationships
16. Foreign Exchange Risk Management - 5%
  • Transaction Exposure
  • Translation Exposure
  • Operating Exposure

SECTION E: DIGITAL FINANCE [5%]
17. Digital Finance - 5%
  • Meaning, Traditional Finance vs. Digital Finance
  • Digital Finance Ecosystem –
    • Digital Infrastructure
    • Digital Money – Cards, Central Bank Digital Currency
    • Digital Assets – Non-Fungible Tokens, Private Cryptocurrency, Stablecoins
    • Digital Financial Services – Wallets, UPI, Neo-Banks, FinTech
  • Regulation and Governance in a Digital Finance Environment