CA Final AFM Mock Test 1
Paper 2: Advanced Financial Management — 100 marks, 3 hours. Part I: 15 case-scenario MCQs (30 marks, scored instantly). Part II: 6 descriptive questions (70 marks).
- Part I (30 marks): all 15 MCQs are compulsory, 2 marks each.
- Part II (70 marks): Question 1 is compulsory; answer any 4 of the remaining 5 (14 marks each).
- Scans keep ICAI's original numbering — each item tells you its number in this paper.
Part I — Case Scenario based MCQs (30 marks)
- Read the case scenario (the scanned page) — the four options (a)–(d) for each MCQ are printed in it.
- In the box under the scan, tap one option for each MCQ. You can change your choice until you submit.
- After all 15 MCQs, press Submit Part I at the end of Part I: you get your score out of 30, and every MCQ shows whether you were right plus ICAI's answer.
- Not sure? Tap Flag to mark an MCQ for review; the palette at the top shows what is answered, unanswered and flagged.
- Your answers, flags and timer are saved on this device, so you can close the page and continue later. Answers lock once submitted; press Start over to try again.
Case Scenario 1 · MCQs 1–5
Source: ICAI Model Test Paper 1, Part I, case scenario 1 Your time here: 0:00 (counts while the timer runs) · exam pace about 18 min
Read Case Scenario 1 as text
Grow More Ltd. an NBFC is in the need of funds and hence it sold its receivables to MAC Financial Corporation (MFC) for ₹100 million. MFC created a trust for this purpose called General Investment Trust (GIT) through which it issued securities carrying a different level of risk and return to the investors. Further, this structure also permits the GIT to reinvest surplus funds for short term as per their requirement. MFC also appointed a third party, Safeguard Pvt. Ltd. (SPL) to collect the payment due from obligor(s) and passes it to GIT. It will also follow up with defaulting obligor and if required initiate appropriate legal action against them.
Case Scenario 2 · MCQs 6–10
Source: ICAI Model Test Paper 2, Part I, case scenario 2 Your time here: 0:00 (counts while the timer runs) · exam pace about 18 min
Read Case Scenario 2 as text
Mr. A is interested in investing ₹1,00,000 for which he is considering following three alternatives: (i) Invest ₹1,00,000 in Mutual Fund X (MFX) (ii) Invest ₹1,00,000 in Mutual Fund Y (MFY) (iii) Portfolio - Invest ₹60,000 in Mutual Fund X (MFX) and ₹40,000 in Mutual Fund Y (MFY) Average annual return earned by MFX and MFY is 12% and 11% respectively. Risk free rate of return is 8% and market rate of return is 10%. Covariance of returns of MFX, MFY and market portfolio Mix are as follow: … (the full data table is in the scan above)
Case Scenario 3 · MCQs 11–15
Source: ICAI Model Test Paper 3, Part I, case scenario 2 Your time here: 0:00 (counts while the timer runs) · exam pace about 18 min
Read Case Scenario 3 as text
Bank A is in need of fund for a period of 14 days. To meet this financial need on 20th September 2013 Bank A enters into an agreement with Bank B under which it will sell 10% Government of India Bonds issued on 1st January 2013 @ 5.65% for ₹ 8 crore (Face value is ₹ 1,00,000 per Bond). The clean price of same Bond is ₹ 99,420 and the Initial Margin be 2% and the maturity date of Bond is 31st December 2018. Consider 360 days in a year and interest is payable annually.
Part II — Descriptive Questions (70 marks)
Question 1 is compulsory; answer any 4 of Questions 2–6. Write your answers, then open ICAI's answer to self-evaluate.
Question 1 · 14 marks · compulsory
Source: ICAI Model Test Paper 1, Question 1 Your time here: 0:00 (counts while the timer runs) · exam pace about 25 min- (a) Shashi Co. Ltd has projected the following cash flows from a project under evaluation: (6 marks)
- (b) You sold Hong Kong Dollar 1,00,00,000 value spot to your customer at ₹5.70 & covered yourself in London market on the same day, when the exchange rates were … (4 marks)
- (c) “Financial projections include three basic documents that make up a business’s financial statements.” Explain these documents. (4 marks)
Show ICAI's answer to Question 1
Question 2 · 14 marks
Source: ICAI Model Test Paper 2, Question 4 Your time here: 0:00 (counts while the timer runs) · exam pace about 25 min- (a) Eagle Ltd. reported a profit of ₹77 lakhs after 30% tax for the financial year 2011-12. An analysis of the accounts revealed that the income included extraordinary items of ₹8 lakhs and an extraordinary loss of ₹10 lakhs. (6 marks)
- (b) State the challenges to the Efficient Market Theory. (4 marks)
- (c) State the key decisions falling within the scope of financial strategy. (4 marks)
- OR (c) What do you mean by CDSs? List the main purposes for which CDS can be used. (4 marks)
Show ICAI's answer to Question 2
Question 3 · 14 marks
Source: ICAI Model Test Paper 3, Question 5 Your time here: 0:00 (counts while the timer runs) · exam pace about 25 min- (a) XYZ Ltd., a company based in India, manufactures very high quality modem furniture and sells to a small number of retail outlets in India and Nepal. (10 marks)
- (b) A trader is having in its portfolio shares worth ₹85 lakhs at current price and cash ₹15 lakhs. The beta of share portfolio is 1.6. (4 marks)
Show ICAI's answer to Question 3
Question 4 · 14 marks
Source: ICAI Model Test Paper 4, Question 5 Your time here: 0:00 (counts while the timer runs) · exam pace about 25 min- (b) Suppose a dealer quotes ‘All-in-cost’ for a generic swap at 8% against six month LIBOR flat. If the notional principal amount of swap is ₹ 5,00,000. (6 marks)
Show ICAI's answer to Question 4
Question 5 · 14 marks
Source: ICAI Model Test Paper 6, Question 5 Your time here: 0:00 (counts while the timer runs) · exam pace about 25 min- (a) Following information is given in respect of Alpha Ltd., which is expected to grow at a rate of 20% p.a. for the next three years, after which the growth rate will stabilize at 8% p.a. normal level, in perpetuity. (8 marks)
- (b) A trader is having in its portfolio shares worth ₹170 lakhs at current price and cash ₹30 lakhs. The beta of share portfolio is 1.6. (6 marks)
Show ICAI's answer to Question 5
Question 6 · 14 marks
Source: ICAI Model Test Paper 7, Question 2 Your time here: 0:00 (counts while the timer runs) · exam pace about 25 min- (a) On January 28, 2023, an importer customer requested a Bank to remit Singapore Dollar (SGD) 2,500,000 under an irrevocable Letter of Credit (LC). However, due to unavoidable factors, the Bank could affect the remittances only on February 4, 2023. (6 marks)
- (b) Bank A enter into a Repo for 14 days with Bank B in 10% Government of India Bonds 2028 @ 5.65% for ₹ 8 crore. (4 marks)
- (c) What are the parameters to identify currency risk? List out the ways to minimize such risk. (4 marks)
Show ICAI's answer to Question 6
How this paper matches ICAI's weightage
Share of the printed marks (Part I 30 + Part II 84) in each section of ICAI's official section-wise weightage for AFM.
| Section | This paper | ICAI band | |
|---|---|---|---|
| I · Financial Policy, Risk & Capital Budgeting | 12.3% (14 marks) | 8–15% | ✓ within |
| II · Security Analysis, Valuation & Portfolio | 24.6% (28 marks) | 20–30% | ✓ within |
| III · Securitization, Mutual Funds & Derivatives | 24.6% (28 marks) | 20–30% | ✓ within |
| IV · Forex, International FM & Interest Rate Risk | 22.8% (26 marks) | 20–25% | ✓ within |
| V · Business Valuation and M&A | 12.3% (14 marks) | 10–15% | ✓ within |
| VI · Startup Finance | 3.5% (4 marks) | 2–5% | ✓ within |
Source weightage: ICAI Board of Studies, section-wise weightage for CA Final (new scheme). Questions: ICAI Board of Studies, Model Test Papers, Final Course Group I (Feb 2025). Answers are ICAI's. Compiled by capapers.com; not an ICAI publication.
CA Final AFM Mock Test 1 — FAQs
What is in CA Final AFM Mock Test 1?
A full 100-mark Paper 2 (Advanced Financial Management) mock for 3 hours: Part I has 15 case-scenario MCQs worth 30 marks, scored instantly; Part II has 6 descriptive questions of 14 marks each, where Question 1 is compulsory and you answer any 4 of the other 5 (70 marks).
Is this an official ICAI mock test paper?
No. It is compiled by capapers.com from questions in the ICAI Board of Studies Model Test Papers (Final Course Group I, February 2025 edition, relevant for May 2025 onwards). Every question and answer is shown exactly as ICAI printed it, and the source of each question is given.
Are answers included?
Yes. Part I is scored against ICAI's answer key when you submit, and every MCQ shows ICAI's answer. For each Part II question you can open ICAI's own answer after attempting it.
How does this mock match the ICAI weightage for AFM?
The questions were chosen so each of ICAI's six AFM sections gets a share of the marks within ICAI's official section-wise weightage band: I Financial Policy, Risk & Capital Budgeting 12.3% (ICAI band 8–15%); II Security Analysis, Valuation & Portfolio 24.6% (ICAI band 20–30%); III Securitization, Mutual Funds & Derivatives 24.6% (ICAI band 20–30%); IV Forex, International FM & Interest Rate Risk 22.8% (ICAI band 20–25%); V Business Valuation and M&A 12.3% (ICAI band 10–15%); VI Startup Finance 3.5% (ICAI band 2–5%).
How should I attempt this AFM mock test?
Start the 3-hour timer, answer all 15 MCQs and press Submit Part I, then write your Part II answers on paper and compare them with ICAI's answers question by question.