KASNEB CIFA Advanced study guide
KASNEB CIFA Advanced · Work through your exam, one topic at a time.
CIFA - Certified Investment and Financial Analysts - is a professional qualification offered by Kasneb, the Kenya Accountants and Secretaries National Examinations Board, a State Corporation under The National Treasury and Economic Planning that was established by the Government of Kenya in 1969. Kasneb states that the qualification is designed for persons who aspire to excel as investment, securities and financial analysts, portfolio managers, investment bankers, fund managers or consultants in national and global financial markets. The KASNEB CIFA Advanced study guide has 4 sections and about 1,248 words.
01Investment Analysis
Investment analysis centres on incremental cash flows discounted at an opportunity cost of capital. A candidate must be fluent with NPV, IRR, modified IRR, payback and discounted payback, the profitability index, and the annuity and perpetuity formulas used to shortcut them.
300 words, about 2 min02Securities and Financial Analysis
Equity valuation rests on discounted cash flow models (Gordon growth, multistage dividend discount, free cash flow to firm and to equity) and on relative valuation through P/E, P/B, P/S and EV/EBITDA. For Gordon growth, P0 = D1/(r − g) with D1 = D0(1 + g); the model requires r g and a growth rate that is sustainable (roughly no faster than long-run nominal GDP).
332 words, about 2 min03Portfolio Management
Portfolio return is the weighted average of asset returns, but portfolio risk is not: variance depends on weights, individual variances and covariance (or correlation). Diversification works because correlation is imperfect; risk can be eliminated entirely only when correlation is −1, and portfolio standard deviation equals the weighted average of asset standard deviations only when correlation is +1.
314 words, about 2 min04Financial Markets and Investment Banking
Questions here test structure and mechanics. Know the money market (instruments of one year or less: treasury bills, commercial paper, interbank deposits) versus the capital market (equities and bonds); the primary market, where an issuer raises new funds through an IPO, rights issue, private placement or bond issue, versus the secondary market, where investors trade existing securities and gain liquidity and price discovery.
302 words, about 2 min