FTC Exam Tips Core Papers

FTC Exam tips June 2007 Core Papers

Paper 3.5

Key Areas:
A fundamental appreciation of the key activities associated with strategic analysis, choice and implementation will always be required in interpreting the scenario.
The relevance of ethics and corporate governance to strategic decision making
Issues related to globalization and international business management
Marketing and how it may be influenced by ethics and globalisation
Be able to comment in general on how things like HR and IT can help underpin a strategic plan

Paper 3.6 ACR (IAS & GBR)

Section A
This compulsory question will be on the preparation of consolidated accounts and the twist that is due is that it will have a foreign subsidiary.
Section B
Mixed scenario based questions involving some of the following standards
Impairment
Share based payments
Deferred tax
Financial instruments.
Reirement benfits
Discussion question on accounting theory in repect of recognition and measurement issues

Paper 3.7

Section A:
1) OverseasNPV:ThistopicwaslastexaminedinDecember2003andthereforewillbeoneverybody’stiplist.Thespecificitemsthatyouneedtobefamiliarwithare:theapplicationofdoubletaxagreements,remittancesfromsubsidiaries,useofpurchasingpowerparitytheoryandtheoverallstructureofanOverseasNPV.ExcellentquestionsareAxmine(Pilot94)andAVTO(Dec03).HehasalsowrittenaslightlydifferentstyleofquestionWickern(Dec01)wherehegivesyouallthePVcalculationsinthequestionandasks you to analysis the numbers. This is worth reviewing. Basic awareness of political and economic risk is essential.
2) Risk management:
CurrencyRisk:ScottwroteawonderfulquestioncalledLammer(Q2Jun06)whichyoushouldreviewindetailasitincludeshismaintricksonallthemajortechniquestohedgetransactionrisk.ItisalsoworthreviewingVertid(Jun95)inwhichScotttakesamoretheoretical approach to currency risk.
Interestraterisk:Thistopicappearedasacasestudyinthelastexam.However,beawarethatyourexaminerhasalreadywrittenacasestudythatcombinedCurrencyRiskandInterestraterisk(Autocrat-December2002).Playitsateandreviewthistopic.Excellent questions are HYK Communications Dec (99) and Interest Rate Hedge (Jun 05).
3) Huntingdownthediscountrate:WACC-RiskadjustedWACC–APVcalculationswithinthecontextofastandardinvestmentappraisalquestion.HoweverriskadjustedWACCcouldalsobeexaminedwithinthecontextoftraditionalgearing.WACC-Jetter(c)(Jun02)andSemer(a)(Dec05).RiskAdjustedWACC–RomageJun(00).TraditionalGearing-Bentras(Dec01).APV–Strayer(Jun 02).
4) MergerandAcquisitions:AFCFcalculationpossiblywithinthecontextofGoingPrivate.Alsoreviewtheshareforshareexchange style questions Raywood( Dec 92).
Section B:
1) Economic Value Added – EVA This is a topically area and you should review Toutplut (Jun 02) and Remuneration (Dec 04).
2)PortfolioTheoryandCAPMHasder(Jun03)isanexcellentquestionasitcoversbothPortfolioTheoryandCAPMcalculationsandthetopicofinternationaldiversification.ThePortfolioTheorysectionistechnicallydemandingasyouaregiventhecovarianceasopposedtothenormalcorrelationcoefficient.ItisalsointerestingtonotethatinScott’sanswerhecalculatedthecoefficientofvariation for the first time. This will now be a standard requirement in all portfolio theory questions.
3) Term Structure of Interest rate - review Bond Prices (Jun 03) and BNG (Dec 00)
4) Internationaleconomics–I.M.F-(Dec96),Currentaccountdeficit(Pilot01),Foreigntraderisks(Jun01)andPoliticalrisk(Dec01).