For all the CA final aspirants, the elective paper is a soothing one as anyone will manage to clear the line even if we allocate just one fifth of the study time as compared to other subjects. Being open book, these papers requires smart work rather than hard work. I took Financial Services and Capital Markets as my elective and here's sharing all the details and my experience to tackle this paper.
How to choose elective paper?
There’s a concept called T-shaped skills in management which emphasized on learning everything about something and something about everything and elective paper is a beginning to develop expertise knowledge on our area of interest. If you have good time to prepare for final exams, I suggest you to choose a paper on which you wish to make your career. Honestly, all the elective paper gives equal opportunities when it comes to scoring marks if you have decent preparation.
Who can choose FSCM paper?
FSCM is a stepping stone for everyone who wants to make their career in core finance including equity research, investment banking, portfolio management etc., This paper gives fair idea about sources of funding, different types of instruments and basics of how a primary and secondary market works. Even if you don’t have prior knowledge of markets and interested in it, go for this paper as it gives bundle of knowledge.
Things to do before starting your exam preparation
Generally, before starting your focused preparation, make sure you are done with first time reading or completed classes and have fair idea about the contents of all the subjects. For FSCM, start noting down the closing sensex and nifty index prices in a spreadsheet or a notebook. It hardly takes two minutes and make it as a habit before every EOD or before starting your day. It helps you to know what is happening in the economy and triggers you to learn new things and keeps updated.
Preparation Strategy before exam
Now, these are more specific to the FSCM paper. FSCM paper is more practical one
1. Observe the trend
In FSCM, 5 case studies will be there and each case study is generally specific to one topic or coupled with similar topics. Check out the entire past main exam question papers. You will find some similar trend. Though ICAI is unpredictable, definitely one or two case study will lend its hand. I am giving my observations from past exam papers which helps you to analyze the trend.
- A case study on IPO/ buy back/ rights issue / bonus issue. These case studies generally have more questions about SEBI regulations. Also read about these events in the market. Also have a grip on all the recent SEBI circulars and notifications.
- A case study on Mutual fund: This one is more calculation based and you should know key terms of Mutual funds and MF regulations. Read Key Information Memorandum of any MF.(you can find this in specific MF site of AMFI site)
- A business scenario: This case study is asked upon trending and new age business and mostly focused on PE, VC topics. So read about new business models, pros and cons and think about new ideas and decision making. I got a question on Edutech. You may get questions on E-vehicles, e-commerce, Fintech, Online meeting apps etc.,
- A question on Leasing and capital budgeting: This question is going to be a problem solving and decision making one. For this one, prepare the capital budgeting chapter of SFM and FM (Inter). Make sure you solve at least one such question before your exam day.
- Bank funding and working capital: In last 2-3 papers, this topic is quite recurring. Along with bank funding, factoring and new instruments like CDS, CDO (though not in detail, learn theory part and have understanding) also asked. For this, study material is the best source. Have a clear idea on the difference between the bank funding methods like OD, CC etc., Have a list of ratios and their formulas.
2. Have a practical touch
You can see many interesting things happening in market nowadays like hitting record highs, corrections, new age companies coming in etc., and ICAI is testing us based on these events too. Like I got a replica of Reliance’s rights issue. Before that ILFS case study was there in the paper. So note down the major events and have an insight about it. Recent major events that may have ICAI’s attention is Zomato IPO, Inflation, monetary policies.
3. MCQs
It is the savior as it is mostly asked from book and you just need to have a read along with proper index. Allocate the first one hour along with the reading time for solving MCQs. Attend the MCQs of all the five case studies and make choice based on MCQs unknown. Try to assure at least 30 marks in this section to start descriptive answers with free mind.
4. What to carry in exams?
When it comes to materials to be taken for open book exam, I have seen people carrying two extra bags full of books or even getting a load man along with them only to make sure they shouldn’t regret after seeing a question. But if you take correct materials that is enough. Even if u have 100 books, u can’t refer more than 3 books in that 4 hours. What I did is, along with the institute study material, I created a booklet of the following things.
- Detailed index of study material with each topics and page no.
- List of all ratios, their formulas and their analysis (best and worst ratio)
- SFM formulas and FM formulas too
- Summary of all SEBI regulations in a tabular form (along with no. of day for each procedure, threshold limits, contents of prospectus or documents, eligibility and regulation no.)
- Case studies of past papers along with ICAI answers (have a list of all the topics covered in these case studies)
- Create a list of words in spreadsheet that will help you trigger idea on decision making or problem analysis question. This is my suggestion as for these questions we will be left blank in the exam hall. At that time if we see these words, we can write answer to the point. Some of those words are liquidity position, short term, long term, leveraging, equity, bank funding, inflation, leasing, market position etc., These are all simple financial terms only. But it won’t strike during exam time. In such situation this list will come handy. I suggest making this type of list for SCMPE too and daily read these words.
- Key Information Memorandum (KIM) of any mutual fund.
- Abridged prospectus of any recent IPO
Along with the above, if you have any CS professional friend, get the Corporate funding and listing study material from them. Though I didn’t took that, I felt that subject has more coverage of the FSCM contents and includes all types of funding methods and instruments.
Also If you don’t have prior idea of the contents of materials you are carrying, then it will be useless. So make sure you read all the materials once, before your exam.
To conclude, allocate at least a day or two in your schedule for elective well before the exam, to prepare all the materials and everything. In your free time, have a look at the headlines of economic times or money control. Have an eye on all the recent SEBI circulars and notifications. A little bit of extra effort will add more on your aggregate marks. All the best for the exams and see you in the CA fraternity soon!
The author can also be reached at r.shreethoppae@gmail.com
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