Ch 5 · Security Valuation — CA Final AFM
5 levels · 61 questions · free
How to play
Mixed questions from this chapter — fill the missing term, sort into the right box, match the pairs, order the steps, or catch the formula that is wrong.
What this drills
The biggest chapter in the paper. Gordon and Walter cost marks on a single sign; bonds cost them on which price the yield is struck against.
- ✓Dividend and earnings based equity models
- ✓FCFF, FCFE and enterprise value
- ✓Bond pricing, YTM, duration and convexity
- ✓Money market instruments and term structure
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Games are revision; the syllabus is the book. Conferenza stocks the CA Final AFM lectures and books covering the same chapters.
CA Final books →Ch 5 · Security Valuation — questions
When does a bond sell at a discount?+
When the required rate of return is GREATER than the coupon rate. Equal means par; required rate below the coupon means a premium.
What is bond immunisation?+
Choosing bonds so that price risk and reinvestment risk — which move in opposite directions when rates change — cancel out. A bond is immunised when its duration equals the holding period.