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マインドマップギャラリー ACCA_AFM mind map
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ACCA_AFM mind map
Passed all ACCA subjects, and passed 3 AAA SBR AFM in one test in the July 2020 exam season. Please share your notes for protection. AFM is relatively simple and there are not many notes. Please pay attention to the AAA and SBR notes.
2021-08-19 20:38:55 に編集されました
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AFM
Advanced financial management
revision
objective
maximum the shareholder wealth measured by dividend yield and capital gain
cover the cost of capital and leave surplus to shareholder
Maximize through 4 aspects: investment, financing, dividend, risk management
Financing must consider leverage. Factors that affect leverage include life cycle, operating gearing, stability of revenue, and security (collateral). It is asset-intensive, has many mortgage assets, and is easy to borrow.
WACC cost of capital
cost of equity - CAPM
cost of debt - IRR calculates cost of debt as %
cost of preference shares - equivalent to perpetual bonds
DCF
p15 example questions
advanced investment appraisal techniques
IRR&MIRR
The assumption of IRR is flawed. It assumes that the cash flow received can continue to be invested at the same IRR rate and obtain the same rate of return. Cash flow after the investment phase are reinvested at the project's IRR, e.g. See argument on p16
MIRR is equivalent to = (WACC discounted pv÷cost) raised to the power of the number of years to get the average annual return rate. Then × (WACC 1)-1, we get the internal rate of return of excess return based on WACC reinvestment
Risk and uncertainty
risk is predictable, uncertainty is not predictable
duration duration
PV of each year and PV of total return weighted, × year. Cost does not need to be included in the calculation
recover half of the present value of the project. The longer the duration, the longer the recovery time and the greater the uncertainty.
value at risk
normal distribution, confidence level, you need to be able to look at the normal distribution table
advanced cost of capital
In fact, it is the various elements in the WACC calculation formula.
β
The current stock price reflects two kinds of risks, so the βe measured by the backtest reflects these two risks. After reducing the leverage, the βa obtained is the pure commercial risk of all companies in the industry, and after adding the leverage of the target company or target project, the βa is obtained. unique βe'
However, a company may not only be involved in one industry, so it is not appropriate to use βa calculated by another company.
Therefore, we need to use the idea of business risk weighting, which is actually beta weighting, p33
capital structure
traditional theory
U-shaped curve, with the lowest cost of capital in the middle
MM theory
Under the no-tax assumption, liabilities have no impact Under tax conditions, the more debt there is, the greater the tax deduction will be
bond valuation and bond yield
duration
measure the sensitivity of bond prices to changes in interest rate The longer the duration, the stronger the volatility
modified duration D/(1 r)
term structure of interest rates and the yield curve Interest rate term structure and yield curve
p49 example questions
Yield to maturity asks about IRR, and the one calculated in a single year is yield curve or spot rate.
adjusted present value
Different cash flows use different discount rates to separate investment and financing.
p72
The cash flow of investment uses kei and βa to calculate the discount rate; the cash flow of financing uses kd
kei algorithm for investment cash flow
βa → CAPM → kei, directly discount with kei instead of WACC
Ke = Kei (1-t)(Kei - Kd)Vd/Ve, in the formula book
financing cash flow
There should be only one question in KD, just make sure you choose correctly.
issue cost = 2/98 x investment tax shield = investment x interest rate x n/12 x T This is the tax shield Subsidy benefit = investment x interest rate x n/12 x (1-T) The amount of preferential income is subject to tax deduction
It should be noted that in financing, there will be interest payment every year / equal payment every year. The two types must be distinguished.
overseas investment
p91
Acquisitions and merges
business valuation
It is divided into absolute valuation and relative valuation. Please refer to the examples for details.
p129
mergers and acquisitions
The knowledge points are very fragmented and are basically the content learned by senior financial management.
p142
financing
Financing during the acquisition process
cash
cash retained from earning, debt issue, bank loan, mezzanine finance mezzanine financing
Convertible bonds are for the public, while mezzanine bonds are non-standardized contracts for private parties.
paper
share exchange, convertible debt
p162
Corporate reconstruction and reorganization
reconstruction schemes
The knowledge points for text questions in Chapter C are only p166~p172
financial reconstructions
Mainly to change the company's capital structure
leveraged buy-outs
Purchase part of the business from shareholders and make it a wholly-owned subsidiary
If it is bought by management, it is MBO.
leveraged recapitalization
Leverage up
debt for equity swaps
debt-equity swap
portfolio restructuring - unbundling
do subtraction split
demergers
Or called spin-off, which is the opposite of a merger, but the shareholder ownership does not change, it is just a spin-off.
sell-off
It was dismantled and sold to a third party other than shareholders.
MBOs & MBIs
To management & to people outside shareholders and management
organizational restructuring
Organizational structure adjustment, mainly focusing on the first two
Summary of examples
p173
advanced risk management
Standardized calculation of risk
Word question about risk
Mainly read the textbook, the ideas in the textbook are already very logical. The textbook mainly combines topics to understand knowledge points. The mind map is only for establishing the overall framework and is not used for main review.