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FIN2601: Financial Management
OCT/NOV Examination 2026 — Revision Guide
Covers Past Papers: 2023 to 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Economic & Management Sciences
Exam Revision Guide
FIN2601
Module Code:
Financial Management
Module Name:
OCT/NOV 2023, 2024, 2025
Papers Covered:
OCT/NOV Examination 2026
Prepared For:
100 (typical)
Total Marks:
University of South Africa (UNISA)
Institution:
Study for understanding, not memorisation. Work through every calculation step-
by-step.
Exam Revision Notes | FIN2601 | OCT/NOV 2023–2025
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
How to Use This Revision Guide
This document compiles representative exam-style questions drawn from the FIN2601
syllabus as assessed in the OCT/NOV 2023, 2024, and 2025 examination sittings, to-
gether with fully worked answers. Questions are grouped by study unit, mirroring the
structure of the actual exam. Use this to practise calculations, check your method, and
identify weak areas before the 2026 sitting.
FIN2601 Syllabus Overview (all six study units examined):
• Study Unit 1: Introduction to Financial Management — goals, agency theory, business
forms
• Study Unit 2: Financial Statements and Ratio Analysis
• Study Unit 3: Time Value of Money (TVM)
• Study Unit 4: Risk and Return — statistics, CAPM, portfolio diversification
• Study Unit 5: Interest Rates and Bond Valuation
• Study Unit 6: Share Valuation and Capital Structure
Page 2 of 31
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
OCT/NOV 2025 Examination Paper
FIN2601 — Financial Management
Duration: 2 hours Total Marks: 100
Page 3 of 31
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
Question 1 [20 marks]
(a) [6 marks]
Question: Briefly explain the PRIMARY goal of a financial manager in a corporation,
and explain why profit maximisation is considered an inferior goal compared to share-
holder wealth maximisation. (6 marks)
Answer:
The primary goal of financial management is to maximise shareholder wealth, measured
by the market price of the firm’s ordinary shares.
Why profit maximisation is inferior:
• Ignores timing: Profit maximisation does not distinguish between profits earned to-
day and those earned in future periods. A rand earned today is worth more than a rand
earned in five years due to the time value of money. Shareholder wealth maximisation ex-
plicitly discounts future cash flows.
• Ignores risk: Two projects may yield the same accounting profit but carry very different
risk levels. Profit maximisation ignores this; wealth maximisation penalises higher-risk
cash flows through a higher discount rate.
• Uses accounting profit, not cash flow: Accounting profit is subject to manipula-
tion (e.g. depreciation method choice). Cash flow is harder to manipulate and is the true
driver of value.
• Short-term focus: Managers who focus on profits may cut investment in R&D or main-
tenance to boost current profits, destroying long-term value.
• Ignores dividends vs. retention trade-off: Wealth maximisation considers how earn-
ings are deployed, not just their size.
Exam Tip
Examiners award marks for: (1) stating the correct primary goal, (2) naming at least
three specific weaknesses of profit maximisation with brief explanation. One sentence
per weakness is sufficient.
Page 4 of 31
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
(b) [4 marks]
Question: Define the agency problem and describe TWO agency costs that arise
when management acts in its own interest rather than in the interest of shareholders.
(4 marks)
Answer:
The agency problem arises from the separation of ownership (shareholders) and control
(managers). Managers (agents) may pursue personal goals at the expense of shareholders
(principals).
Two agency costs:
• Monitoring costs: Shareholders incur costs to monitor management — e.g. audit fees,
board oversight expenses, performance reporting systems.
• Bonding costs: Costs of contractual mechanisms that align management interests with
shareholders — e.g. share option schemes, performance bonuses. These reduce the agency
problem but are themselves a cost.
(c) [5 marks]
Question: Compare the following three forms of business ownership with respect to
liability, taxation, and continuity: sole proprietorship, partnership, and company
(corporation). (5 marks)
Answer:
Aspect Sole Proprietorship Partnership Company (Pty Ltd /
Ltd)
Liability Unlimited — personal Joint and several unlim- Limited to investment;
assets at risk ited (general partners) shareholders not person-
ally liable
Taxation Owner taxed on busi- Partners taxed indi- Taxed at corporate rate
ness income at personal vidually on share of (28%); dividends taxed
rate profit again (double taxation)
Continuity Ceases on death or Dissolved by Perpetual existence;
retirement of owner death/withdrawal independent legal entity
unless partnership deed
provides otherwise
Page 5 of 31
, FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
(d) [5 marks]
Question: Briefly distinguish between the money market and the capital market, and
provide ONE example of an instrument traded in each market. (5 marks)
Answer:
Money Market:
• Deals in short-term debt instruments with maturities of one year or less.
• Lower risk; high liquidity; instruments used for short-term borrowing and investment.
• Example: Treasury bills (T-bills), negotiable certificates of deposit (NCDs), commercial
paper.
Capital Market:
• Deals in long-term securities — both debt (bonds) and equity (shares) with maturities
exceeding one year.
• Higher risk and return; enables long-term financing of assets.
• Example: Ordinary shares on the JSE, government bonds (RSA government 10-year bond).
Page 6 of 31
]]
⋆ ⋆
FIN2601: Financial Management
OCT/NOV Examination 2026 — Revision Guide
Covers Past Papers: 2023 to 2025
⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆ ⋄ ⋆
Economic & Management Sciences
Exam Revision Guide
FIN2601
Module Code:
Financial Management
Module Name:
OCT/NOV 2023, 2024, 2025
Papers Covered:
OCT/NOV Examination 2026
Prepared For:
100 (typical)
Total Marks:
University of South Africa (UNISA)
Institution:
Study for understanding, not memorisation. Work through every calculation step-
by-step.
Exam Revision Notes | FIN2601 | OCT/NOV 2023–2025
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
How to Use This Revision Guide
This document compiles representative exam-style questions drawn from the FIN2601
syllabus as assessed in the OCT/NOV 2023, 2024, and 2025 examination sittings, to-
gether with fully worked answers. Questions are grouped by study unit, mirroring the
structure of the actual exam. Use this to practise calculations, check your method, and
identify weak areas before the 2026 sitting.
FIN2601 Syllabus Overview (all six study units examined):
• Study Unit 1: Introduction to Financial Management — goals, agency theory, business
forms
• Study Unit 2: Financial Statements and Ratio Analysis
• Study Unit 3: Time Value of Money (TVM)
• Study Unit 4: Risk and Return — statistics, CAPM, portfolio diversification
• Study Unit 5: Interest Rates and Bond Valuation
• Study Unit 6: Share Valuation and Capital Structure
Page 2 of 31
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
OCT/NOV 2025 Examination Paper
FIN2601 — Financial Management
Duration: 2 hours Total Marks: 100
Page 3 of 31
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
Question 1 [20 marks]
(a) [6 marks]
Question: Briefly explain the PRIMARY goal of a financial manager in a corporation,
and explain why profit maximisation is considered an inferior goal compared to share-
holder wealth maximisation. (6 marks)
Answer:
The primary goal of financial management is to maximise shareholder wealth, measured
by the market price of the firm’s ordinary shares.
Why profit maximisation is inferior:
• Ignores timing: Profit maximisation does not distinguish between profits earned to-
day and those earned in future periods. A rand earned today is worth more than a rand
earned in five years due to the time value of money. Shareholder wealth maximisation ex-
plicitly discounts future cash flows.
• Ignores risk: Two projects may yield the same accounting profit but carry very different
risk levels. Profit maximisation ignores this; wealth maximisation penalises higher-risk
cash flows through a higher discount rate.
• Uses accounting profit, not cash flow: Accounting profit is subject to manipula-
tion (e.g. depreciation method choice). Cash flow is harder to manipulate and is the true
driver of value.
• Short-term focus: Managers who focus on profits may cut investment in R&D or main-
tenance to boost current profits, destroying long-term value.
• Ignores dividends vs. retention trade-off: Wealth maximisation considers how earn-
ings are deployed, not just their size.
Exam Tip
Examiners award marks for: (1) stating the correct primary goal, (2) naming at least
three specific weaknesses of profit maximisation with brief explanation. One sentence
per weakness is sufficient.
Page 4 of 31
,FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
(b) [4 marks]
Question: Define the agency problem and describe TWO agency costs that arise
when management acts in its own interest rather than in the interest of shareholders.
(4 marks)
Answer:
The agency problem arises from the separation of ownership (shareholders) and control
(managers). Managers (agents) may pursue personal goals at the expense of shareholders
(principals).
Two agency costs:
• Monitoring costs: Shareholders incur costs to monitor management — e.g. audit fees,
board oversight expenses, performance reporting systems.
• Bonding costs: Costs of contractual mechanisms that align management interests with
shareholders — e.g. share option schemes, performance bonuses. These reduce the agency
problem but are themselves a cost.
(c) [5 marks]
Question: Compare the following three forms of business ownership with respect to
liability, taxation, and continuity: sole proprietorship, partnership, and company
(corporation). (5 marks)
Answer:
Aspect Sole Proprietorship Partnership Company (Pty Ltd /
Ltd)
Liability Unlimited — personal Joint and several unlim- Limited to investment;
assets at risk ited (general partners) shareholders not person-
ally liable
Taxation Owner taxed on busi- Partners taxed indi- Taxed at corporate rate
ness income at personal vidually on share of (28%); dividends taxed
rate profit again (double taxation)
Continuity Ceases on death or Dissolved by Perpetual existence;
retirement of owner death/withdrawal independent legal entity
unless partnership deed
provides otherwise
Page 5 of 31
, FIN2601 | Financial Management — Exam Revision OCT/NOV 2023–2025
(d) [5 marks]
Question: Briefly distinguish between the money market and the capital market, and
provide ONE example of an instrument traded in each market. (5 marks)
Answer:
Money Market:
• Deals in short-term debt instruments with maturities of one year or less.
• Lower risk; high liquidity; instruments used for short-term borrowing and investment.
• Example: Treasury bills (T-bills), negotiable certificates of deposit (NCDs), commercial
paper.
Capital Market:
• Deals in long-term securities — both debt (bonds) and equity (shares) with maturities
exceeding one year.
• Higher risk and return; enables long-term financing of assets.
• Example: Ordinary shares on the JSE, government bonds (RSA government 10-year bond).
Page 6 of 31
