I have made this point to some CA council members too and would like to use this forum.
The contents of the paper Strategic Financial Management are very good - I am glad to see that it is at par with what one expect any international course on present-day finance. One would love chartered accountants to possess financial skills at par with MBAs - this topic endeavors to ensure this.
However, sadly enough, financial calculators are not allowed in the exams. In absence of this, students are being taught wrong methods of computing IRRs. They do two computations and then work out an interpolated rate, and think that is the IRR, which is totally incorrect. Students perforce remain limited to discounting tables at 10% and 11%, and cannot compute discounted values at 10.59%, because there is no such table available.
Further, globally the standard method of discounting for fixed income securities and options is to use continuous compounding (e to the powre of rate*time). However, this cannot be done by a student because no calculator can compute e to the power of a fraction.
In real life, none of the students will have to compute discounted values using discounting tables, as Excel does that. But the excel techniques are available on financial calculators too.
I am surprised why could this point escape attention.
CAclubindia
