CMA Final Paper 14 (SFM) study guide
CMA Final Paper 14 (SFM) · Work through your exam, one topic at a time.
Paper 14, Strategic Financial Management (SFM), is the advanced finance paper of the CMA Final level. It is aimed at candidates who have already cleared the intermediate stage and now need to make and defend financial decisions at a board level: setting financial policy, pricing risk, valuing businesses, structuring deals and managing money across borders. The CMA Final Paper 14 (SFM) study guide has 10 sections and about 3,096 words.
01Financial Policy and Corporate Strategy
Paper 14 tests whether you can connect a company's financial policy choices - capital structure, dividend, investment and liquidity - to its competitive strategy and to value creation, rather than treating them as isolated computations. Corporate strategy sets the portfolio (which businesses to be in); business strategy sets competitive positioning; financial policy is the functional-level translation into funding, payout and investment rules.
322 words, about 2 min02Risk Management
Risk management in Paper 14 covers identification, measurement and treatment of enterprise and financial risks, and the economics of hedging - whether the hedge genuinely reduces cash-flow volatility net of cost. Risks are strategic, operational, financial (market - interest rate, FX, commodity; credit; liquidity) and compliance-related.
302 words, about 2 min03Security Analysis and Valuation
This domain tests whether you can convert fundamentals into an intrinsic value and defend it with a model, and whether you can value bonds and measure their interest-rate risk. Gordon growth: P0 = D1/(ke − g), where D1 = D0(1 + g).
317 words, about 2 min04Portfolio Management
Portfolio management tests construction (diversification and the optimal risky portfolio), equilibrium pricing through CAPM, and performance measurement - including which ratio applies to which portfolio. Two assets: σp² = w1²σ1² + w2²σ2² + 2w1w2ρσ1σ2.
282 words, about 1 min05Securitisation and Derivatives
This domain covers pooling and true sale of receivables, and the pricing and hedging of forwards, futures, options and swaps. The exam favours structure described in words plus no-arbitrage checks.
322 words, about 2 min06Foreign Exchange Exposure and Risk Management
This domain tests the three exposures, the parities linking spot, forward and interest rates, and the arithmetic of choosing between forward, money-market and option hedges. Transaction exposure is committed foreign-currency cash flow.
284 words, about 1 min07International Financial Management
International financial management extends capital budgeting and financing across borders: parity conditions, repatriation restrictions, country risk and the instruments used to fund overseas operations. Forecast cash flows in the foreign currency, convert at forecast spot rates built from PPP, and discount at the domestic WACC - or keep everything in the foreign currency at the foreign WACC and convert the NPV once.
319 words, about 2 min08Mergers, Acquisitions and Corporate Restructuring
This domain tests synergy valuation, exchange ratios, financing choice between cash and stock, accretion/dilution, and post-merger ownership mathematics. Synergy = V(AB) − [V(A) + V(B)] and sets the maximum premium payable.
316 words, about 2 min09Startup Finance and Private Equity / Venture Capital
This domain tests the funding ladder, the term-sheet economics that decide who gets what, and valuation methods suited to pre-revenue companies. Bootstrapping, then angel/seed, Series A/B/C, growth PE and exit (IPO, strategic sale, secondary).
328 words, about 2 min10Business Valuation
Business valuation integrates the syllabus: choosing the right approach, building a defensible DCF, and applying discounts and premiums appropriate to the purpose - transaction, tax, regulatory or litigation. Income: FCFF discounted at WACC, FCFE at ke; terminal value = FCFF(n+1)/(WACC − g), with g no faster than long-run nominal growth.
304 words, about 2 min