Discussion of the economic environment and theimpact on interest and exchange rates.
Working capital management.
Investment appraisal and cost of capital.
ACCAF9 has been tested using this exam format since December 2014.
20multiple choice questions worth 2 marks each. The MCQs will largely beknowledge based and will balance out the questions in Section B to make surethat all aspects of the syllabus are examined. It is likely that some of theMCQs will test the financial management and objectives (ratio analysis, theconcept of shareholder wealth) as well as economic environment and financialinstitutions topics (financial intermediation, fiscal and monetary policies).The efficient market hypothesis is likely to be tested here too.
Butbear in mind that the whole point of setting MCQs is to test good coverage ofthe syllabus in the exam.
Q1– Q3: Three 10 mark questions. The questions will be broken down into subrequirements and may also be based on a short scenario.
Areasexpected to be tested in questions 1 to 3 working capital management (theimpact of a change in credit period or accepting a factor’s offer), business orsecurity valuations (assets method and earnings valuation), financial riskmanagement (most likely in the form of currency risk but it is possible thatinterest rate risk is examined here).
Q4& Q5: Two 15 mark questions which will be broken down into sub requirementsand be scenario based. These two questions will focus on these topicsinvestment appraisal (likely to be an NPV with inflation and tax), workingcapital management and business finance (either an evaluation of financingoptions – interest coverage and gearing ratios are likely to be important hereor a cost of capital calculation are most likely). Whichever of these threetopics does not feature in question 4 or 5 will appear in question 1, 2 or 3.
F9has the following syllabus areas:
A Financial management function
B Financial management environment
CWorking capital management
Theexam is written so that approximately 50% of the marks will be numerical innature and the other 50% will be narrative (either knowledge or understandingin the case of multiple choice questions or requiring written answers insection B questions). You should not neglect your written skills. Try toexplain your points in full sentences rather than simply leaving a bullet pointanswer.
Atthe beginning of the exam you are given 15 minutes “reading and planning” time.During this time you can read and annotate your question paper and so this is aperfect chance to make notes next to the information in the scenarios of thingsto include in your answer.
Duringthis time you should also think about the order in which you will attempt thequestions – start with your best question first but remember to watch yourtiming very closely – you seriously damage your chances of passing if you donot attempt all the questions set or if you significantly run out of time.
Presentationis important. It is up to you to make it easy for your marker to give youmarks. It is your responsibility to convince the marker you deserve to pass, somake your computations, workings and narrative easy to follow.
Calculatingcost of equity using CAPM or dividend valuation model, cost of redeemable debtand bank loan/preference shares. Circumstances under which WACC can be used. ?
Discussionquestion on risk and uncertainty – example – sensitivity analysis andprobability distribution.
Quantitydiscount (EOQ) and factoring calculations. Discussion of working capitalfinancing and/or investment policies.
Factorsto consider in formulating dividend policy or the effect of a change individend policy on share price.
Valuationof equity using; DVM, P/E ratio and asset basis.
Valuationof convertible debt and calculation of conversion premium. Explanation of weakand strong form of efficient market.
Hedgingcurrency risk using forward contract and money market hedge. Discussion oftransaction, economic and translation risk.