ACCA AFM — Advanced Financial Management Technical Articles

Considers how a traditional project can be reassessed using option valuation and how it assists when evaluating a portfolio of inter-dependent projects.

Covers real options calculations through three worked examples, then considers limitations of applying real options in practice and how they can be mitigated.

Suggests a methodical approach to any international project appraisal exam question — Part 1 focuses on a Section B 25-mark question approach.

Follows Part 1 — showing how to methodically approach an international project appraisal question in Section A, worth 50 marks.

Explains the significance of the information given in interest rate risk management questions and demonstrates exactly what is required to score marks.

Examines basis risk — which arises when the price of a futures contract does not have a predictable relationship with the spot price of the instrument being hedged.

Shows how interest rate forwards are determined from the spot yield curve and how they are used in determining the value of an interest rate swap.

Considers how bonds are valued and the relationship between bond value, yield to maturity, and the spot yield curve — the first of two related articles.

Covers foreign exchange futures and options using real market data, focusing on key areas of significant importance for AFM exam candidates.

Explains currency swaps — agreements in which two parties exchange principal and interest in one currency for principal and interest in another.

Looks at decision making under uncertainty — how to consider all possible outcomes and associated probabilities when evaluating financial and strategic decisions.

Demonstrates how to tackle a business valuation question in AFM — covering assets-based, income-based, and cash flow-based approaches with practical application.

Explains reverse takeovers — now examinable in AFM — including the mechanics, potential benefits, and drawbacks associated with this form of acquisition.

Explores the circumstances where managing risk may increase the value of a corporation — moving beyond the mechanics to understanding the strategic rationale.

Provides a general overview of the different aspects, issues, and developments of Islamic finance — extending the explanations given in the sukuk bonds article.

Covers Islamic finance as a growing source of finance — including the theory, practical use, and the success and failure of sukuk bonds in real markets.

Explores how behavioural factors influence financial decision making and, consequently, how stock markets and companies' financial strategies may behave unpredictably.

Covers securitisation — a topical issue since the credit crunch and still a relevant area for AFM students on structured finance and financial instruments.