CAIIB ABFM Preparation Tips 2025, Module-wise Strategy

Paper 3- Module A: The Management Process

Topic

Subtopics

Basics of Management

Definition of Management – The Management Process – Functions of Management – Importance of Management – Management Thoughts & Approaches – Management Challenges & Opportunities – Introduction to Strategic Management – Business Environment Analysis

Planning

Fundamentals of Planning – Steps in Planning – Importance of Planning – Advantages and disadvantages of planning – Management by Objectives – Plan Components – Contingency planning – Forecasting & Decision Making

Organizing

Introduction and Fundamentals of Organizing – Importance of Organisation – Stages in Organising Process – The Organising Process – Principles of organizing – Types of Organisations – Organisation structure – Organisation charts and manuals – The Organisation culture – Authority & Responsibility – Key Issues in Organisation Structure – Organisational Change – Conflict Dynamics

Staffing

Functions of Staffing – Objectives of staffing – Nature of staffing – Facets of staffing – Significance of staffing – System approach to staffing – Recruitment – Selection – Training – Retention and development – Knowledge and learning management – Performance Appraisal – Human Resource Development

Directing

Characteristics of directing – Importance of directing – Elements of directing – Leadership – Motivation – Communication – Supervision

Controlling

Basics of Controlling – Characteristics of controlling – Advantages of controlling – Limitations of controlling – Types of control management – Control process – Relation between planning and control – Control Techniques – Control technique and Information Technology

Paper 3- Module B: Advanced Concepts Of Financial Management

Topic

Subtopics

Sources of Finance and Financial Strategies

Equity Capital – Internal Accruals – Preference Capital – Term Loans – Debentures – Alternative Financing Strategies in the Context of Regulatory Requirements

Financial and Operating Leverages

Financial Leverage – Degree of Financial Leverage and its Behaviour – Operating Leverage – Degree of Operating Leverage and its Behaviour – Combined or Total Leverage

Capital Investment Decisions

Objective of capital investment decisions – Estimation of project cash flows – Forecasting and its relation to regulation of capital for short, medium and long-term periods – Relationship between sales, production and other functional budgets – Cash Forecasts – Cost analysis for projects – Methods of Investment appraisal – Social Cost Benefit Analysis

Capital Budgeting for International Project Investment Decisions

Foreign Investment Analysis – Special Considerations-Foreign & Home Currency Cash Flows – Foreign Currency Discount Rates Computation – International Portfolio Investment – Institutional Constraints – Direct and Indirect Channels for International Portfolio Investment – Exchange and Country Risk – Return and Risk of Foreign Investment – Capital Asset Pricing model – Arbitrage pricing theory – International Capital Budgeting Issues involved in overseas projects – Approaches for evaluation of overseas projects – Evaluation methods – Impact of transfer pricing

Adjustment of Risk and Uncertainty in Capital Budgeting Decision

– Sources & Perspectives on Risk – Sensitivity Analysis – Scenario Analysis – Hillier Model – Simulation Analysis – Decision Tree Analysis – Corporate Risk Analysis – Managing Risk – Project Selection Under Risk – Risk Analysis in Practice

Decision Making

Decision Making using Cost-Volume-Profit (CVP) Analysis – Decision Making using Relevant Cost Concepts – Decision Making using Activity Based Costing – Ethical and Non-Financial Considerations Relevant to Decision Making

Paper 3- Module C: Valuation, Mergers & Acquisitions

Topic

Subtopics

Corporate Valuations

Approaches to Corporate Valuation – Adjusted Book Value Approach – Stock and Debt Approach – Direct Comparison Approach – Discounted Cash Flow Approach – Steps involved in valuation using DCF Approach

Discounted Cash Flow Valuation

Estimating Inputs – Approaches to Discounted Cash Flow Models – Various Discounted Cash Flow Models – Dividend Discount Model – Applicability of the Dividend Discount Model

Other Non-DCF valuation models

Relative valuation model – Equity Valuation Multiples Model – Enterprise value multiples Model – Choosing the right multiples – Book value approach Model – Stock and debt approach

Special cases of valuation

Intangibles –Brand, Human valuation etc. – Real estate Firms – Start-up firms – Firms with negative or low earnings – Financial Service companies – Distressed firms – Valuation of cash and cross holdings – Warrants and convertibles – Cyclical & non-cyclical companies – Holding companies – E-commerce firms

Mergers, Acquisitions and Restructuring

Types of Transactions – Reasons for Merger – Mechanics of a Merger – Costs and Benefits of a Merger – Exchange Ratio in a Merger – Purchase of a Division / Plant – Takeovers – Leveraged Buyouts – Acquisition Financing – Business Alliances – Managing Acquisitions – Divestitures – Holding Company – Demergers

Deal structuring and financial strategies

– Negotiations – Payment and legal considerations – Tax and accounting considerations – Tax reliefs and benefits in case of Amalgamation in India – Financial reporting of business combinations – Deal Financing – Financing of cross-border acquisitions in India

Paper 3- Module D: Emerging Business Solutions

Topic

Subtopics

Hybrid Finance

Advantages and disadvantages of Hybrid securities – Types of hybrid securities – Preference Share Capital – Features of Warrants – Features of Convertible Debentures – Differences between Warrants and Convertible debentures – Valuation of Warrants – Valuation of Compulsorily Convertible (Partly or fully) Debentures – Objective of issuing Warrants and Convertible debentures – Features of Foreign Currency Convertible Bond (FCCB) – Mezzanine Financing – Innovative Hybrids

Start-up Finance

– Benefits to startup under the Startup Plan – Startup definition in India – Challenges faced by Startups – State Startup Policy – Pitch Presentation – Programmes and competitions for startups – Tax exemptions – Funding – Investor’s outlook in Startups – Funding schemes and programmes – International challenges and bridges

Private Equity and Venture Capital

– Characteristics of Venture Capital Investments – Characteristics shared by Private Equity and Venture Capital as well as their key distinctions – Financing options available through Venture Capital – Investment in Private Equity – Benefits obtained through private equity – Drawbacks to the practice of private equity – Due diligence – Exit Strategies

Artificial Intelligence

– History of Artificial Intelligence – Applicability of Artificial Intelligence – Artificial Intelligence in Banking and Finance – The future scope of Artificial Intelligence – Neural Networks – Control Theory and Cybernetics – Rational Agents – Motion and Manipulation – Tools and Techniques of Artificial Intelligence – Artificial Intelligence and Morality

Business Analytics as Management Tool

– Essentials of Business Analytics – Types of Analytics – Elements of Business Analytics – Big Data Analytics – Web and Mobile Analytics – Comparing web vs. mobile Analytics – Importance of Business Analytics

Green and Sustainable Financing

– ISO Standards for Green Finance – Building Green Finance – International Best Practices towards Green Finance – Public Policy in India – Progress of Green Finance in India – Challenges and way forward – Growth of Regulatory Framework – National Efforts towards Green and Sustainable Financing – RBI Views on Climate Risk and Sustainable Finance

Special Purpose Acquisition Company

– Advantages of SPAC – Disadvantages of SPAC – SPAC Formation and Timelines – The SPAC Merger – Stakeholders – Characteristics of SPACs – Process – SPAC Capital Structure – Trust Account – Warrants – Forward Purchase – IPO Agreements – De-SPAC Process