CA Final Nov 2026 AFM important questions: 10 repeat types
CA Final AFM important questions for November 2026 are ten question types ICAI keeps setting: forex hedges, mutual fund NAV, option valuation, index futures hedges, Sharpe's optimal portfolio, share valuation, international projects, caps and floors, merger swap ratios and 4-mark theory. Each was set at least once in ICAI's last four AFM papers, most of them more than once. Below: where ICAI set each one, the working that earns the marks, and the trap.
AFM is on Wednesday, 4 November 2026. For chapter-wise marks, see our CA Final AFM chapter-wise weightage and ABC analysis; this post is about the questions inside those chapters.
Where these AFM important questions come from
Every reference is from ICAI's suggested answers for Paper 2, which print each question with its answer: May 2025 (PDF) (opens in a new tab), September 2025 (PDF) (opens in a new tab), January 2026 (PDF) (opens in a new tab) and May 2026 (PDF) (opens in a new tab). All six papers' suggested answers, attempt by attempt, are in CA Final suggested answers May 2026 PDF.
ICAI's RTP for November 2026, Group I (PDF) (opens in a new tab) names twelve areas "from which numerical questions are normally asked", and its 14 AFM questions open with two case scenarios, one on international financial management and one on forex. The grouping into types is ours.
CA Final AFM important questions: the 10 types at a glance
| # | Question type | Where ICAI set it | Marks |
|---|---|---|---|
| 1 | Forex hedge: forward, money market, option, cancel and rebook | May 2025 MCQs 12–15; May 2026 MCQs 13–15 | 8; 6 |
| 2 | Mutual fund NAV with loads and dividend equalisation | May 2025 Q5(a); May 2026 Q3(b) | 7; 4 |
| 3 | Black-Scholes and option strategies | May 2026 Q6(b); Jan 2026 Q1(c) | 7; 4 |
| 4 | Hedging a portfolio with index futures | May 2025 MCQs 9–11; Sep 2025 Q4(b) | 6; 4 |
| 5 | Sharpe's optimal portfolio and single index model | Jan 2026 Q5(a); May 2026 Q4(a) | 8; 6 |
| 6 | Share valuation: H-model, FCFE, FCFF, EV/EBITDA | May 2026 Q1(b), Q5(a); Sep 2025 Q1(a), Q6(a) | 4–7 each |
| 7 | International project NPV and APV | May 2026 Q3(a); Sep 2025 Q5(a); May 2025 Q4(a) | 6; 7; 6 |
| 8 | Interest rate caps, floors and FRAs | May 2025 Q6(b); Jan 2026 Q4(a); Sep 2025 Q2(b) | 7; 6; 4 |
| 9 | Mergers: swap ratio and merger offers | May 2025 Q4(b); Jan 2026 MCQ case 4; May 2026 Q6(a) | 4; MCQs; 7 |
| 10 | 4-mark theory | Four parts in every paper | 4 each |
1. Forex hedge case: set in every paper
All four papers had a forex case scenario in the MCQs. In May 2025 (MCQs 12–15, 8 marks), a UK firm with a $20 million receivable compared an option hedge, a forward hedge, a money market hedge and no hedge, using forecast spot rates with probabilities. In May 2026 (MCQs 13–15), an importer booked a 3-month forward to buy USD 2,00,000, then had to settle early, cancel and rebook.
What wins marks: the right side of every quote. You buy foreign currency at the bank's ask and sell at the bid. For a receivable, the money market hedge borrows the foreign currency at the borrowing rate.
The trap: in May 2025, ICAI's key gives the highest expected proceeds to no hedge (MCQ 15), because the forecast rates were favourable. In May 2026, closing a contract to buy dollars means selling them back at the bid: on 1 March, the 1-month bid of ₹83.70 against the contract's ₹84.00 is a ₹60,000 loss on USD 2,00,000, option (A) in MCQ 15.
2. Mutual fund NAV with loads and dividend equalisation
A mutual fund NAV question came up in every paper. May 2025 Q5(a), 7 marks, is the full version: 800 lakh units at ₹44.30, 16 lakh units issued at opening NAV plus a 2% load "adjusted for dividend equalization", 8 lakh units repurchased at opening NAV less a 2% exit load, and 60% of income paid out in June. It ended with NAV per unit on 30 June, "upto 4 decimal place".
What wins marks: a month-by-month table of units, income and NAV. Equalisation means a new unit pays for its share of income already earned, so old holders aren't diluted.
The trap: putting the load on the wrong base, or rounding early when ICAI asked for four decimals. May 2026 Q3(b) asked the other classic: a dividend plan against a bonus plan.
3. Black-Scholes: the AFM important formulas in one question
May 2026 Q6(b), 7 marks: share price ₹120, exercise price ₹115, 50 days, risk-free rate 8%, volatility 30%, d1 = 0.5375 given. It asked for the hedge ratio, the probability of ending in the money, and call and put values.
| Step | Formula | ICAI's figure |
|---|---|---|
| Hedge ratio | N(d1) | 0.7045, about 70% |
| d2 | d1 − σ√t | 0.4264 |
| Probability of ending in the money | N(d2) | 0.6651, about 67% |
| Call | S × N(d1) − E × e^(−rt) × N(d2) | ₹8.89 |
| Put (put-call parity) | −S + C + PV(E) | ₹2.63 |
The trap: the table moves in steps of 0.01 and neither d1 (0.5375) nor d2 (0.4264) sits on a row, so ICAI interpolated between 0.53 and 0.54, and between 0.42 and 0.43; don't just take the nearest value.
Option strategies come as short parts: the long strangle was January 2026's compulsory Q1(c), worked through in the AFM weightage post.
4. Hedging a portfolio with index futures
May 2025 MCQs 9–11 and September 2025 Q4(b) asked how many index futures contracts hedge a share position; in September 2025, a long position of 5,000 shares at ₹50 (beta 1.5) and a short of 2,500 shares at ₹80 (beta 2), fully hedged with Nifty futures.
What wins marks: contracts = value of position × beta ÷ (futures price × lot size). To move beta to a target, use (current beta − target beta).
The trap: using the spot index, not the futures price, or forgetting the lot size.
5. Sharpe's optimal portfolio: the cut-off question
January 2026 Q5(a), 8 marks, was the biggest part on that paper: five securities with return, unsystematic risk and beta; rank, find the cut-off, choose. May 2026 Q4(a), 6 marks, was Sharpe's single index model.
What wins marks: rank by (Ri − Rf) ÷ βi, then Ci = σm² × Σ[(Ri − Rf)βi ÷ σ²ei] ÷ [1 + σm² × Σ(βi² ÷ σ²ei)] down the list. ICAI's cut-off was 6.87: C, E and B in; D and A out.
The trap: security A returned 5% against a 7% risk-free rate, a negative ratio (−4); it still goes in the table, last. ICAI used the unsystematic risk figures as given as σ²ei; squaring them again breaks the cut-off.
6. Share valuation: H-model, FCFE, FCFF
Security and business valuation together took 65 marks over the four papers. May 2026 had a compulsory 4-mark H-model in Q1(b) and a two-stage FCFE in Q5(a); September 2025 had EV/EBITDA and FCFF.
What wins marks, from May 2026 Q1(b) (dividend ₹40, growth falling from 15% over five years, required return 13%):
- Long-run growth = ROE × retention = 12% × 50% = 6%; H = 5 ÷ 2 = 2.5
- Value = D0(1 + gn) ÷ (r − gn) + D0 × H × (gc − gn) ÷ (r − gn) = ₹605.71 + ₹128.57 = ₹734.28
Against a price of ₹850, the share is overvalued.
The trap: long-run growth isn't given; you derive it from terminal ROE and retention. ICAI accepted the deviation on intrinsic value (15.76%) or on market price (13.61%).
7. International project: NPV and APV
International financial management came up in every paper. May 2026 Q3(a), 6 marks: a 2-year euro project, 50% debt, borrowing in INR at 9%, EUR at 5% or USD at 3%, with interest rate parity.
What wins marks: convert each loan's interest and repayment at IRP forward rates and compare the rupee outflow. APV = base NPV at the unlevered cost of capital + PV of the interest tax shield.
The trap: USD at 3% looks cheapest, but ICAI picks INR borrowing: under parity the rupee cost of foreign debt rises with the forward rate.
8. Interest rate caps, floors and FRAs
Caps and floors were May 2025 Q6(b) (7 marks) and January 2026 Q4(a) (6 marks); an FRA was September 2025 Q2(b). May 2025 gave a cap at 8% and a floor at 5% on $50 lakh, and asked for net savings at 10%, at 4%, and with the cap bought and the floor sold.
What wins marks: cap payoff = (actual rate − cap rate) × notional; floor payoff = (floor rate − actual rate) × notional; net of premium. One line per scenario.
The trap: a borrower buys a cap, a depositor buys a floor; January 2026 Q4(a) had a borrower and a depositor in one question. Selling the floor turns premium paid into premium received.
9. Mergers: swap ratio and merger offers
M&A came up in every paper. May 2025 Q4(b) was a share exchange, January 2026's MCQ case 4 a bank merger, and May 2026 Q6(a), 7 marks, ranked three settlement offers: all cash, cash plus shares, and cash plus convertible bonds.
What wins marks: swap ratio on the basis asked (EPS, market price or book value); post-merger EPS = combined earnings ÷ (acquirer's shares + new shares).
The trap: in May 2026, the bond is worth the higher of redemption value (₹680.24) and conversion value (₹660); ICAI computed both before ranking.
10. AFM important topics for theory
Each paper had four 4-mark theory parts, sometimes with an either/or:
- Security analysis: weak-form tests (May 2025 Q3(c)), technical analysis (Sep 2025 Q4(c)), chart patterns (Jan 2026 Q4(c)), Elliott wave (May 2026 Q4(c))
- Financial policy: the CFO's role (May 2025 Q2(c)), sustainable growth (May 2026 Q1(c))
- Startups: business succession (Sep 2025 Q1(c)), startup funding (May 2026 Q2(c))
- Securitisation and tokenisation (May 2025 Q4(c), May 2026 Q3(c))
Write points, each with a heading.
How to practise them
- One type a day, oldest paper to newest, then the RTP question on that type.
- Formula line first, then substitution, then answer, so a wrong figure keeps the method marks. ICAI's examiners' comments show where students lose them.
- Time it: under two minutes a mark (how to attempt a CA Final paper in 3 hours).
ICAI's papers are on our CA Final past year question papers and CA Final RTP pages.
Important questions for other CA Final papers
- CA Final FR important questions: consolidation, financial instruments, Ind AS 115, EPS and the other FR types
- CA Final Audit important questions: ethics cases, CARO, audit reports, bank audit and the other Audit types
- CA Final DT important questions: company computation, TDS, transfer pricing, foreign tax relief and more
- CA Final IDT important questions: the GST computation, customs valuation, baggage, penalties and appeals
- CA Final IBS important questions: the question types ICAI sets inside its case studies, from strategy to forex
Frequently asked questions
What are the AFM important questions for Nov 2026?
On ICAI's last four papers: forex hedge cases, mutual fund NAV, Black-Scholes, index futures hedges, Sharpe's cut-off, share valuation, international projects and APV, caps and floors, merger swap ratios, and 4-mark theory.
Does ICAI repeat AFM questions?
Not word for word in these four papers, but the types repeat.
Which AFM important formulas should I learn first?
Black-Scholes and put-call parity, the futures hedge, Sharpe's cut-off, the H-model and FCFE/FCFF, interest rate parity, cap and floor payoffs, and swap ratio with post-merger EPS. All 50 of them, chapter by chapter in ICAI's notation, are in our CA Final AFM formula sheet for Nov 2026.
Is the RTP enough for AFM?
No. The RTP has 14 questions; the last four papers had 60 MCQs and 24 descriptive questions. Use the RTP as one more question per type.
Put the ten types into one paper
A full, timed paper shows where you still lose marks. Our CA Final AFM mock tests are full-syllabus papers on ICAI's latest pattern: 30% MCQs and 70% descriptive, 100 marks in 3 hours, every chapter covered with more weight on the most-asked, and every amendment applicable for November 2026 tested.
You write by hand and upload one PDF. Your checked copy comes back within 24 hours, with ICAI-style step-wise marks and the reason for every mark cut, plus detailed suggested answers with working notes. You can read preview pages of the first mock before you buy. For a dated mock schedule to 4 November, see our CA Final AFM mock test guide, and for every subject, our CA test series and CA mock tests.