CA Final · May 2026 · Paper 2
CA Final Advanced Financial Management May 2026: paper analysis
Our own analysis of the official paper, as of 12 October 2026. The questions and answers belong to ICAI; read them on ICAI's website.
Chapter-wise marks
Where the marks were in this paper (out of 100; internal-choice alternatives not double counted).
What each question tested
In our words, by question number. Open the official paper for the full question.
| Q | Marks | Tests | Chapter |
|---|---|---|---|
| 1(a) | 6 | Evaluating an overseas project with foreign currency cash flows and conversion to home currency | International Financial Management |
| 1(b) | 4 | H-model dividend valuation during a declining growth transition, and judging over or under valuation | Security Valuation |
| 1(c) | 4 | Sustainable growth rate versus target growth and funding constraints under a leverage cap | Financial Policy and Corporate Strategy |
| 2(a) | 6 | Two-factor arbitrage pricing theory: mispricing check and building a long-short arbitrage portfolio | Portfolio Management |
| 2(b) | 4 | Option moneyness, intrinsic and time value, and exercise outcomes at expiry | Derivatives Analysis and Valuation |
| 2(c) | 4 | True or false evaluation of start-up financing sources and valuation practices | Startup Finance |
| 3(a) | 6 | Choosing the cheapest financing option for a foreign project and computing adjusted present value | International Financial Management |
| 3(b) | 4 | Comparing dividend and bonus plans of a mutual fund with entry and exit loads | Mutual Funds |
| 3(c) | 4 | Securitisation of non-performing assets: benefits and regulatory and valuation challenges | Securitization |
| 4(a) | 6 | Sharpe single index model: cut-off rate, optimal portfolio weights and CAPM consistency | Portfolio Management |
| 4(b) | 4 | Returns on a closed-ended fund trading at a premium or discount to NAV using geometric mean | Mutual Funds |
| 4(c) | 4 | Elliott Wave theory in technical analysis | Security Analysis |
| 4(c) OR | 4 | Hedging a floating rate loan with an interest rate collar | Interest Rate Risk Management |
| 5(a) | 5 | Two-stage FCFE valuation and implied terminal growth rate | Business Valuation |
| 5(b) | 7 | Bank repricing gap analysis and earnings at risk under rate scenarios | Interest Rate Risk Management |
| 5(c) | 2 | Why transaction exposure matters more than translation exposure | Foreign Exchange Exposure and Risk Management |
| 6(a) | 7 | Merger evaluation: synergies, P/E based fair value and ranking alternative share and cash offers | Mergers, Acquisitions and Corporate Restructuring |
| 6(b) | 7 | Black-Scholes valuation of call and put with hedge ratio and exercise probability | Derivatives Analysis and Valuation |
What stood out
- Each of the five case scenarios tested a single chapter; VaR under Risk Management and real options under capital budgeting were the newer MCQ themes.
- International finance had a strong presence: two 6-mark overseas project questions plus a forex MCQ case.
- Portfolio Management and Derivatives each carried about 10 to 14 descriptive marks, consistent with earlier attempts.
- Theory was light, spread over start-ups, securitisation, Elliott Wave and exposure types.
- A bank gap analysis and earnings-at-risk question was an unusual 7-mark addition.
Practise the chapters that carried the marks
Mergers, Acquisitions and Corporate Restructuring, International Financial Management, Portfolio Management: study guides and practice questions in the CA Final format.