CA FinalApril 25, 2026 ā¢ Dev Sandeep Shah
CA Final AFM Formula Handbook: Portfolio Management, Forex & Black-Scholes Options
Advanced Financial Management (AFM) is purely numerical and conceptual. Scoring a rank depends on mastering portfolio optimization and currency arbitrage formulas.
Key AFM Mathematical Formulations š
Portfolio Variance (2-Asset Case)
Ļ_p^2 = w1^2 Ļ1^2 + w2^2 Ļ2^2 + 2 w1 w2 Cov(1,2)
Interest Rate Parity (Forward Premium/Discount)
F = S * (1 + r_quote) / (1 + r_base)
Treynor vs Sharpe Performance Measure
Treynor measures excess return over Beta (Systematic risk), whereas Sharpe measures excess return over Standard Deviation (Total risk).