CAIIB ABFM By Ashish Sir Class 2
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Business and Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of Advanced Business and Financial Management (ABFM) in the CAIIB curriculum?
ABFM aims to develop senior bankers' competency in strategic financial decision-making, risk management, and business performance evaluation. It equips candidates with tools to analyze complex financial situations faced by banks and corporates.
What is the Gordon Growth Model used for in equity valuation?
Valuing stocks based on dividends growing at a constant rate.
How does Economic Value Added (EVA) differ from traditional accounting profit as a performance metric?
EVA measures value created after deducting the cost of all capital employed, including equity, unlike accounting profit which ignores the cost of equity. A positive EVA indicates that the firm is generating returns above its weighted average cost of capital.
What does the Price-to-Earnings (P/E) ratio indicate about a stock?
How much investors pay per rupee of earnings.
What does the DuPont analysis decompose Return on Equity (ROE) into?
DuPont analysis breaks ROE into Net Profit Margin, Asset Turnover, and the Equity Multiplier (financial leverage). This decomposition helps identify whether profitability, efficiency, or leverage is driving shareholder returns.
What is the difference between Book Value and Market Value of a firm?
Book value is historical cost; market value reflects investor expectations.
What is the significance of the WACC in capital budgeting decisions?
The Weighted Average Cost of Capital (WACC) serves as the discount rate (hurdle rate) for evaluating investment projects; a project should be accepted only if its IRR exceeds the WACC. It reflects the blended cost of debt and equity used to finance the firm.
What is Working Capital Management and why is it critical for banks?
Managing short-term assets and liabilities to ensure operational liquidity.
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