Technical articles and tricky topics

A library of articles and videos to help you improve your understanding of areas you find more difficult or develop a broader insight into the subject.

Note: The volume of technical articles does not reflect syllabus coverage within an exam.

Explain and evaluate the role and responsibility of the senior financial executive or advisor in meeting conflicting needs of stakeholders and recognise the role of international financial institutions in the financial management of multinationals (A)

Patterns of behaviour
Behavioural finance attempts to explain how decision makers take financial decisions in real life, and why their decisions might not appear to be rational every time and, hence, have unpredictable consequences. This article looks at how behavioural factors may influence decision making and, therefore, stock markets’ and companies’ financial strategies.

Risk management
This article explores the circumstances where the management of risk may lead to an increase in the value of a corporation.

Evaluate potential investment decisions and assessing their financial and strategic consequences, both domestically and internationally (B)

Conditional probability
Management decision making in both financial and performance management involves making choices based upon what may happen in the future. This article looks at how to consider all possible outcomes that may arise, together with their associated chances of occurring.

Using real options when making financial strategy decisions
This article considers how an individual traditional project could be reassessed using option valuation and how option valuation could assist when assessing a portfolio of projects. It then concludes with a brief discussion regarding inter-dependent projects.

Investment appraisal and real options
This article looks at how real options can be incorporated into investment appraisal decisions. It discusses real options and then considers the types of real options calculations which may be encountered in Advanced Financial Management (AFM), through three examples. The article then considers the limitations of the application of real options in practice and how some of these may be mitigated.

Securitisation and tranching
Securitisation became a topical issue during the credit crunch, and still remains a relevant issue for financial management and Advanced Financial Management (AFM) students.

International project appraisal – part 1
International project appraisal is an integral part of the Advanced Financial Management (AFM) syllabus. This article suggests a methodical approach to answering any exam question that may arise on this topic, with the first article of two looking at how to tackle a Section B, 25-mark question using materials from your Advanced Financial Management (AFM) studies.

International project appraisal – part 2
Part 1 underlined the importance of international project appraisal within the Advanced Financial Management (AFM) syllabus with a demonstration as to how to tackle a Section B question worth 25 marks. This follow-up piece looks at how to methodically approach an international project appraisal question that may arise in Section A, worth 50 marks.

Aspects of Islamic finance
This article provides a general overview of the different aspects, issues and developments of Islamic finance and extends the explanations provided in the article ‘Islamic finance – theory and practical use of sukuk bonds’.

Islamic finance – theory and practical use of sukuk bonds
This article looks at Islamic finance as a growing and important source of finance, including the success and failure of the use.

Bond valuation and bond yields
In the first of two related articles, we consider how bonds are valued and the relationship between the bond value or price, the yield to maturity and the spot yield curve.

Tricky topic video: Valuations
In this video, expert tutor Rashaad Hussain examines the tricky topic of 'Valuations' (YouTube)

Assess and plan acquisitions and mergers as an alternative growth strategy (C)

Alternative methods of listing
This article begins with a brief summary of the method which companies have traditionally used to achieve a stock market listing, ie an initial public offering (IPO), and then discusses each of the alternative approaches highlighted – Dutch auctions, special purpose acquisition companies, and direct listings – including their advantages and disadvantages.

Reverse takeovers
Reverse takeovers is a topic that is now examinable in Advanced Financial Management (AFM). This article aims to provide an explanation of reverse takeovers and to discuss the potential benefits and drawbacks associated with reverse takeovers.

Business valuations
The primary purpose of this article is to demonstrate how to tackle a business valuation question. The detailed understanding of this topic will be gained from your Advanced Financial Management (AFM) studies, whichever mode you choose to use.

Tricky topic video: Valuations
In this video, expert tutor Rashaad Hussain examines the tricky topic of 'Valuations' (YouTube)

Evaluate and advise on alternative corporate re-organisation strategies (D)

Apply and evaluate alternative advanced treasury and risk management techniques (E)

How to answer a foreign exchange risk management question
This article will explain the significance of the information you’ll be given in foreign exchange risk management questions and show you what you’ll be asked to do.

Basis risk
This article looks at 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.

How to answer an interest rate risk management question
This article explains the significance of the information you’ll be given in interest rate risk management questions and shows you what you’ll be asked to do.

Currency swaps
This article looks at currency swaps, an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency.

Exchange traded foreign exchange derivatives
This article considers both foreign exchange futures and options using real market data, as well as focusing on other areas of significant importance.

Determining interest rate forwards and their application to swap valuation
A look at how interest rate forwards may be determined from the spot yield curve, before considering what they mean and showing how they may be used in determining the value of an interest rate swap valuation.

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