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Introduction to the Financial Management exam

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Published: 22 Sep 2021 Update History

In this guide we will introduce you to the Financial Management exam. We will cover what the Financial Management exam is, what to expect when sitting the exam, what to look out for and how to prepare for the exam.

The exam is 2.5 hours in length and the pass mark is 55%.

The Financial Management exam focuses on four key interlinked business decisions: investment decisions, financing decisions, dividend decisions and risk management decisions. To pass the exam candidates will need to tackle key areas such as:

  • Identifying a business’s capital requirement and recommend relevant methods of financing
  • Identifying the financial risks facing a business and the principal methods of managing those risks
  • Applying appropriate investment appraisal techniques taking into account other factors affecting investment decisions

Candidates will need to be able to consider these areas in the context of the scenario provided and take a joined up approach to how different decisions impact other areas of the business.

What to expect when sitting the Financial Management exam

The Financial Management module exam is 2.5 hours long consisting of three questions. Managing financial risk will have a question all to itself, whereas assessing financing options and investment decisions and valuation will be spread throughout the remaining two questions. 

Each question will likely comprise one larger, normally calculation-based requirement followed by anything up to five or six smaller requirements covering both calculation and discursive style questions. On average the exam tends to be split evenly in terms of calculation-based questions versus discursive or explanation-based questions. Students therefore need to be able to explain and discuss models and theories and cannot rely entirely on calculations to pass the exam.

The Financial Management exam tends to be fair. It means that a well-prepared candidate should pass. A review of past exams will identify that if you are able to master five or six common calculation-based questions you will be putting yourself in a good position to pass the exam. Below are some of the common mistakes that students make in the exam:

  • Not be well enough prepared! Question practise is vital to ensure you are ready for the real exam
  • Failure to pick up sufficient marks on the discursive style questions. You cannot afford to focus solely on the numbers
  • Failure to complete the exam by over answering a particular question, time management is key
  • Being unprepared for the examiner favourites such as NPV, weighted average cost of capital, hedging and business valuations

Preparing for the Financial Management exam

Past exam practise is the trick to passing this exam and you should practise these questions in the exam software as far as possible.