Strategic Financial Management (SFM) (Paper-14) CMA Final Group 3

1. Investment Decisions, Project Planning and Control
(i) Estimation of project cash flow
(ii) Relevant cost analysis for projects
(iii) Project appraisal Methods – DCF and Non-DCF Techniques
(iv) Capital Rationing
(v) Social Cost Benefit analysis

2. Evaluation of Risky Proposals for Investment decisions
(i) Investment decisions under uncertainties
(ii) Effect of Inflation on Capital Budgeting Decisions
(iii) Sensitivity Analysis, Certainty Equivalent Approach, Decision Tree Analysis, Standard
Deviation in Capital Budgeting, Risk Adjusted Discount Rate, Options in Capital Budgeting

3. Leasing Decisions
(i) Lease Financing – Evaluation of Lease vs Buy options
(ii) Break-Even Lease rental determination
(iii) Cross Boarder leasing, Sale and Lease back

SECTION B: FINANCIAL MARKETS AND INSTITUTIONS [20 MARKS]
4. Institutions in Financial Markets
(i) Reserve Bank of India, Commercial Banks, NBFCs
(ii) Insurance Companies, Pensions Funds.

5. Instruments in Financial Market
(i) Money Market Instruments - Call money, Treasury Bills, Commercial Bills, Commercial Paper; Certificate of Deposits, Repo, Reverse Repo and Promissory Notes, Government Securities, Bonds, valuation of Bonds, Price Yield relationship.
(ii) Hedge Funds
(iii) Mutual Funds – Computation of NAV and Evaluation of Mutual fund’s Performance

6. Capital Markets
(i) Primary and secondary markets and its instruments
(ii) Optionally convertible debentures, Deep discount bonds
(iii) Rolling settlement, Clearing house operations
(iv) Dematerialization, Re-materialization and Depository system
(v) Initial Public Offering (IPO) / Follow on Public Offer (FPO) ; Book Building
(vi) Insider trading
(vii) Credit rating - Credit rating agencies in India

7. Commodity Exchange
(i) Regulatory Structure, Design of markets
(ii) Issues in Agricultural, Non-Agricultural Markets, Product design, Spot price and present
practices of commodities exchanges
(iii) Intermediaries in the commodity exchanges & Clearing house operations, risk
management related issues
(iv) Commodity Options on futures and its mechanism

SECTION C: SECURITY ANALYSIS & PORTFOLIO MANAGEMENT [25 MARKS]
8. Security Analysis & Portfolio Management including Equity Reserarch
(i) Security analysis- Fundamental analysis- Economic analysis, Industry analysis, Company analysis, Technical analysis, Momentum analysis - arguments and criticisms
(ii) Market indicators, Support and resistance level, Patterns in stock price
(iii) Statistic models – Moving Averages, Bollinger bands
(iv) Theories on stock market movements – Dow Jones Theory
(v) Portfolio Management – meaning, objectives and basic principles
(vi) Portfolio Management theories – Efficient Market Hypothesis, Markowitz Model, Random Walk theory, CAPM, APT, Sharpe Index
(vii)Portfolio Management – Construction of a Portfolio, Computing the Portfolio Total risk, Classification of risk into systematic and unsystematic, Minimization of Portfolio risk, Monitoring the Risk and Return of a portfolio
(viii)Portfolio Analysis - Security and Capital Market Line, Beta, Levered and Unlevered Beta

SECTION D: FINANCIAL RISK MANAGEMENT [30 MARKS]
9. Financial Risks
(i) Credit Risk, Liquidity Risk, Asset based risk , Operational Risk
(ii) Foreign investment risk, Market Risk

10. Financial Derivatives - Instruments for Risk Management
(i) Forward & Futures – Meaning and Difference between Forwards and Future, Stock futures, Hedging through futures and benefits of Future market, Components of Future Price, Index based Futures, Margins in the derivatives market,
(ii) Options – Meaning, types of Options (Call & Put), Put-Call Parity theory, Determination of Option Premium, Strategies in Options market – spread, bull spread, bear spread, butterfly spread, combination, straddle, Strangle, Strips and Straps, Valuation of Options using-Option Equivalent, Stock Equivalent, Binomial tree approach, Risk neutral and Black-Scholes Model
(iii) Swaps and Swaptions – Meaning, types, features, benefits of Swaps, Interest rate swaps,
(iv) Interest rate derivatives – Meaning, Interest rate caps, interest rate collars, forward rate agreement

11. Financial Risk Management in International Operations
(i) Sources of Foreign currency, debt route, depository receipts, American Depository Receipts(ADRs) – sponsored, unsponsored, Global Depository Receipts (GDRs), Warrants, Foreign Currency Convertible Bonds (FCCBs), Euro Issues, Euro Commercial Paper, Euro Convertible Bonds, Note Issuance Facility, Participating Notes, Foreign Direct Investment.
(ii) Foreign Exchange Market – Exchange Rate determination – Exchange Rate Forecasting- Purchasing Power Parity- Interest Rate Parity
(iii) Exchange Rate Risk management – Forex Hedging tools, exposure netting, currency forward, cross currency roll over, Currency futures, options, money market hedge, assetliability management
(iv) Foreign Investment Analysis: International Portfolio Investment – International Capital Budgeting.