CMA Final Strategic Financial Management Classes

CMA Final Paper 14 — Strategic Financial Management

Strategic Financial Management is the most quantitatively advanced paper in the CMA Final — comparable in depth to CA Final's Advanced Financial Management (Paper 2). This 100-mark paper covers the sophisticated financial tools used in corporate treasury, investment management, and M&A advisory at a level that qualifies CMAs for CFO and strategic finance leadership roles.

Security Analysis and Portfolio Management

• Equity valuation — DDM (Dividend Discount Model), FCFE, FCFF, Residual Income, EV/EBITDA multiples
• Bond valuation — Duration, Modified Duration, Convexity, Immunisation strategy
• Portfolio theory — Markowitz efficient frontier, CAPM (Capital Asset Pricing Model), SML, Beta calculation, Jensen's Alpha, Sharpe ratio, Treynor ratio
• Arbitrage Pricing Theory (APT) — Multi-factor model vs single-factor CAPM

Derivatives

• Futures — Pricing (cost of carry model), basis risk, hedging with index and stock futures
• Options — Call and put payoff diagrams, option strategies (covered call, protective put, straddle, strangle, bull/bear spreads)
• Black-Scholes-Merton (BSM) Model — d1, d2 calculation, N(d) table use, put-call parity, option Greeks (Delta, Gamma, Vega, Theta, Rho)
• Binomial option pricing model — One-period and two-period binomial trees
• Interest rate derivatives — FRAs, interest rate swaps, caps, floors, collars

Mergers, Acquisitions and Corporate Restructuring

• Valuation methodologies — DCF, comparable companies (EV multiples), precedent transactions, LBO model basics
• Synergy valuation — Revenue synergies, cost synergies, tax synergies
• Exchange ratio and EPS accretion/dilution analysis
• Leveraged Buyout (LBO) — Structure, IRR calculation for PE sponsor

Foreign Exchange Risk Management

• Forex fundamentals — Spot rates, forward rates, cross rates, IRPT and PPPT
• Hedging instruments — Forward contracts, currency futures, currency options, currency swaps
• Internal hedging techniques — Netting, matching, leading and lagging
• International Capital Budgeting — APV method, blocked funds, political risk assessment