Tips from BPP and Kaplan for P4

Hi folks, here are some tips for the June 2010 exams from BPP nad Kaplan
P4 Advanced Financial Management

BPP says:

Role and responsibility towards stakeholders:
• Ethical issues continue to appear regularly as an optional discussion question, normally with practical financial issues from elsewhere in the syllabus. The discussion question is normally one of the easier optional questions.

Advanced investment appraisal:
• The compulsory question often features an NPV question with an analysis of risk. Cost of capital calculations are regularly tested, make sure that you are comfortable adjusting betas for differences in gearing. Real options and adjusted present value are also popular themes, and are normally tested in section B of the exam.

Acquisitions and mergers:
• Although this area was heavily examined in December, this exam normally contains a question involving valuations which the examiner sees as a crucial part of the syllabus.

Corporate reconstruction:
• This is a topical area; a question could also ask you to evaluate a capital reconstruction e.g. a business that is considering offering its creditors shares in order to enable it to survive.

Advanced risk management:
• We would expect to see a numerical risk management question featuring either interest rate or exchange rate hedging. Foreign currency derivatives are due to be tested numerically; the new examiner has indicated that questions may well ask you to compare the results of a hedge using a number of different hedging techniques.

Kaplan says:

• Acquisitions and business valuation (especially free cash flow method)
• Net Present Value
• Black Scholes model, but not the Grabbe variant
• WACC
• Interest rate hedging