CAIIB ABFM By Ashish Sir Class 4
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 equips banking professionals with advanced skills in financial analysis, risk management, and strategic decision-making to handle complex business and financial challenges at senior levels.
What is the 'Gordon Growth Model' used for in equity valuation?
To value stocks assuming dividends grow at a constant rate.
How is Economic Value Added (EVA) calculated in the context of bank performance measurement?
EVA is calculated as Net Operating Profit After Tax (NOPAT) minus the product of Weighted Average Cost of Capital (WACC) and total capital employed, reflecting true economic profit beyond the cost of capital.
What does the 'beta coefficient' measure in the context of market risk?
It measures a stock's sensitivity to market movements.
What does the concept of 'Risk-Adjusted Return on Capital' (RAROC) measure in banking?
RAROC measures the ratio of risk-adjusted net income to economic capital allocated, enabling banks to compare profitability across business units after accounting for the risk each unit undertakes.
What is 'Earnings Per Share' (EPS) and how is it calculated?
Net profit divided by number of outstanding equity shares.
What is the significance of the Dividend Discount Model (DDM) in equity valuation for banks?
DDM values a bank's equity by discounting expected future dividends to their present value, making it particularly useful for stable, dividend-paying financial institutions where earnings are predictable.
What is the 'Price-to-Earnings' (P/E) ratio and what does it indicate?
Market price per share divided by EPS, indicating valuation multiples.
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