CMA Final Paper-14 New Syllabus June 2023

CMA Final New Syllabus 2023: The Institute of Cost Accountants of India has revised new syllabus for CMA Final elective Paper-14 Strategic Financial Management (SFM). The new ICMAI Syllabus-2022 shall be applicable from June 2023 term of examinations.

Students taking enrollments in the Final Course have to give one time option about choice of “Elective Paper”.

New Syllabus for SFM

Section A: Investment Decisions

1. Investment Decisions, Project Planning and Control

1. Measuring Cash Flows, Discounted Cash Flow Technique for Project Evaluation
2. 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)
3. Inflation Adjusted Cash Flow Forecasting in Capital Budgeting
4. Capital Rationing for Divisible and Non – divisible Projects (with Application of Integer Programming)
5. Social Cost Benefit Analysis

2. Evaluation of Risky Proposals for Investment Decisions

1. 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
2. Sensitivity Analysis
3. Scenario Analysis
4. Monte Carlo Simulation

3. Leasing Decisions

1. Lease Financing – Evaluation of Lease vs. Buy Options
2. Break-Even Lease Rental Determination and Implicit Rate
3. Cross Border Leasing, Sale and Lease Back

4. Securitization

1. Definition and Concept and Benefits of Securitization
2. Participants in Securitization
3. Mechanism and Problems of Securitization
4. Securitization Instruments

Section B: Security Analysis & Portfolio Management

5. Introduction

1. Fundamental Analysis
2. Technical Analysis

6. Equity and Bond Valuation and Evaluation of Performance

1. Equity Valuation – Discounted Cash Flow Based Valuation, Relative Valuation using Multiples and Weights
2. Bond Valuation – Prices & Yields

7. Mutual Funds

1. Meaning, Advantages and Disadvantages, Structure and Types
2. Regulations
3. Computation of NAV
4. Evaluation of Performance and Movements in Security Values and NAVs of Mutual Funds for Investment Decisions: Perspective of AUM Managers and Individual Investors
5. ETF, REIT, InvIT

8. Portfolio Theory and Practice

1. Portfolio Return and Risk, Systematic and Unsystematic Risk, Diversification strategies (Naïve vs the Markowitz Model)
2. Optimal Portfolio, Efficient Frontier, Capital Market Line
3. Principles of Asset Allocation, Active and Passive Asset Allocation

9. Asset Pricing Theories

1. Single Factor and Multifactor Asset Pricing Theories: CAPM and APT
2. Concepts and Applications (including Levered Beta and Unlevered Beta)

10. Portfolio Performance Evaluation and Portfolio Revision

1. Conventional Performance Evaluation
2. Market Timing and Style Analysis

11. Efficient Market Hypothesis

1. Definition
2. Forms of Market Efficiency
3. Implications

Section C: Financial Risk Management

12. Risks in Financial Market

13. Financial Derivatives – Instruments for Risk Management

1. Introduction to Financial Derivatives
2. Forward and Futures – Meaning and Difference, Pricing, Stock Futures, Index based Futures, Hedging through Futures
3. 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
4. Swaps
   • Meaning, Features, Types, Benefits of Swaps
   • Interest Rate Swaps, Credit Default Swaps
5. Interest Rate Derivatives – Forward Rate Agreement, Interest Rate Futures and Options, Caps, Floors and Collars

Section D: International Financial Management

14. The International Financial Environment

1. International Financial Institutions and Markets
2. Sources of Foreign Currency

15. Foreign Exchange Market

1. Introduction – Structure of Foreign Exchange Market
2. 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
3. Segments of Foreign Exchange Market – Spot Market (including two and three-point Arbitrage), Forward Market
4. Foreign Currency Derivatives
   • Currency Forwards
   • Currency Futures
   • Currency Options
   • Currency Swaps
5. Parity Relationships

16. Foreign Exchange Risk Management

1. Transaction Exposure
2. Translation Exposure
3. Operating Exposure

Section E: Digital Finance

17. Digital Finance

1. Meaning, Traditional Finance vs. Digital Finance
2. 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
3. Regulation and Governance in a Digital Finance Environment