Study guide: 1/3 version

High ranges of debt exist internationally following the Global Financial Crisis. In aggregate with gradual financial increase, this has created a volatile global financial surroundings. As a result, firms are liable to financial chance, including funding and liquidity threat, marketplace risk from hobby charge, alternate rate or commodity charge moves, credit danger and operational hazard. The motive of this challenge is to equip you with the necessary competencies to evaluate these economic dangers and control them strategically with the use of financial devices.

The Financial Risk Management problem extends the governance framework blanketed in the Ethics and Governance situation, discusses the technique of funding evaluation (protected within the Strategic Management Accounting problem) and examines some of the realistic factors and complexities of hedge accounting in relation to the International Financial Reporting Standards that have been blanketed in the Financial Reporting problem.

Financial Risk Management is an non-compulsory concern supplied in the CPA Program.

Exam shape

The Financial Risk Management examination typically comprises completely of multiple-preference questions.

General targets

On completion of this situation, you have to be able to:

  • recognize chance and a threat control framework
  • become aware of the varieties of monetary hazard faced by using an organization
  • observe a realistic approach to assessing, tracking and managing an corporation’s monetary hazard
  • apprehend the funding, liquidity, interest rate, foreign exchange, commodity price, credit and operational chance that organizations face
  • advise an company at the procurement and management of funding and the allocation to competing lengthy-term investments
  • advise an enterprise at the types of monetary gadgets that would be used to high-quality manipulate an organization’s financial hazard
  • display the sensible factors of accounting for derivatives, overlaying both embedded derivatives and derivatives used for hedging purposes
  • provide an explanation for obligations for financial danger and regulatory requirements, and the manage framework to manipulate each monetary and operational dangers.

Subject content material

The weighting column within the following table affords an indication of the emphasis located on every module inside the exam. The share of look at time is a guide in order to allocate your examine time for every module.