101_2013_3_e

FIN2601/101/3/2013

Tutorial Letter 101/3/2013

Financial Management

FIN2601

Semesters 1 and 2

Department of Finance, Risk Management and Banking

FIN2601/101

2

Page

1 INTRODUCTION ............................................................................................................................ 3

1.1 Tutorial matter ................................................................................................................................. 3

2 PURPOSE OF AND OUTCOMES FOR THE MODULE ............................................................... 4

2.1 Purpose .......................................................................................................................................... 4

2.2 Outcomes ....................................................................................................................................... 4

3 LECTURER(S) AND CONTACT DETAILS .................................................................................... 4

3.1 Lecturer(s) ...................................................................................................................................... 4

3.2 Department ..................................................................................................................................... 4

3.3 University ........................................................................................................................................ 5

4 MODULE-RELATED RESOURCES .............................................................................................. 5

4.1 Prescribed books ............................................................................................................................ 5

4.2 Recommended books ..................................................................................................................... 5

4.3 Electronic Reserves (e-Reserves) .................................................................................................. 5

5 STUDENT SUPPORT SERVICES FOR THE MODULE ................................................................ 5

6 MODULE-SPECIFIC STUDY PLAN ............................................................................................... 6

7 MODULE PRACTICAL WORK AND WORK-INTEGRATED LEARNING ..................................... 6

8 ASSESSMENT ............................................................................................................................... 6

8.1 Assessment plan ............................................................................................................................ 6

8.2 General assignment numbers ......................................................................................................... 8

8.2.1 Unique assignment numbers .......................................................................................................... 8

8.2.2 Due dates for assignments ............................................................................................................. 8

8.3 Submission of assignments ............................................................................................................ 8

8.4 Assignments ................................................................................................................................. 10

9 OTHER ASSESSMENT METHODS ............................................................................................. 49

10 EXAMINATION ............................................................................................................................. 49

11 FREQUENTLY ASKED QUESTIONS .......................................................................................... 50

12 CONCLUSION .............................................................................................................................. 57

CONTENTS

FIN2601/101

-3-

IMPORTANT INFORMATION Please register as a user of myUnisa as soon as possible. It is free of charge. Visit https://my.unisa.ac.za

for details. At myUnisa you will be able to get in touch with fellow students, submit your assignments,

update your details, find self-assessment questions, and participate in discussion forums and blogs.

It is also important that you provide Unisa with your cellular number because important announcements

may be sent to you by sms.

Please note that this module carries 12 credits and requires at least 120 hours of study, including the time

required to complete the assignments and to prepare for the examination. Devote at least 120 hours to this

module to ensure your success.

Take note of Rule 12 in the myRegistration @ Unisa brochure. You must pass at least four modules of 12

credits each or two modules of 24 credits each per year. Students who do not comply with this requirement

will be excluded from further admission to the University.

1 INTRODUCTION

Dear Student

Welcome to this module, Financial Management (FIN2601).

You have enrolled for an interesting yet challenging module.

To pass the module, you have to devote at least two hours per day to reading and summarising,

and to practising calculations.

On completion of this module, you should be able to apply financial management knowledge

and the necessary tools to perform the managerial finance function.

1.1 Tutorial matter

Your tutorial matter for Financial Management (FIN2601) consists of the following:

A study guide for Financial Management (FIN2601)

Tutorial Letters 201 and 202 will be sent to you shortly after the closing dates of the

assignments. These letters will contain solutions to the assignment questions of

FIN2601.

Additional resources are available on https://my.unisa.ac.za.

-4-

2 PURPOSE OF AND OUTCOMES FOR THE MODULE

2.1 Purpose

The purpose of this module is to equip students with knowledge of the fundamental principles of

financial management theory and practice.

2.2 Outcomes

On completion of this module, you should be able to:

demonstrate your understanding of the markets and the environment in which

financial management is practised

apply financial management concepts and principles relating to financial statement

analysis

apply techniques relating to the time-value of money to value financial instruments

within a risk/return framework

3 LECTURER(S) AND CONTACT DETAILS

3.1 Lecturer(s)

Enquiries of a purely academic nature concerning this module (eg about a specific calculation in the prescribed book) may be directed to:

Mr AB Sibindi Mr GPM Grebe

HEAD OF MODULE LECTURER Fax: 086 569 8848 Fax: 086 754 9216 E-mail: Course contact (First Semester): [email protected]

(Second Semester): [email protected]

3.2 Department

This module is offered by academic staff members from the Department of Finance, Risk

Management and Banking (DFRB).

FIN2601/101

-5-

Please note that you may contact fellow students, download study material, submit

assignments, change your address, receive notice of a change of examination venue, view

your assignment marks, download previous examination papers, find self-assessment

questions, and get in touch with your lecturer at https://my.unisa.ac.za.

Academic enquiries may also be directed to telephone number 012 429 3603.

3.3 University

Administrative queries should be directed to the appropriate department indicated in the

myRegistration @ Unisa brochure. Examples of administrative queries are registration matters,

study material matters, account queries, and graduation issues. Registration matters must be

directed to [email protected]. Other queries must be directed to the College Information

Officer, Tel 012 429-3925, e-mail [email protected].

4 MODULE-RELATED RESOURCES

4.1 Prescribed books

You must acquire the following prescribed book from one of the official Unisa bookstores

(indicated in Section 13):

Gitman LJ et al. 2010. Principles of managerial finance: global and Southern African perspectives. (1st edition). Pearson. 4.2 Recommended books

Besley/Brigham (2012) CFIN 3 (with Finance Coursemate with eBook Printed Access Card), 3rdEdition ISBN Number 9781133626404

4.3 Electronic reserves (e-Reserves)

None

5 STUDENT SUPPORT SERVICES FOR THE MODULE

Important information appears in your my Studies @ Unisa brochure.

-6-

6 MODULE-SPECIFIC STUDY PLAN

Refer to your my Studies @ Unisa brochure for general time management and planning skills.

A study programme for this module is available on myUnisa. You can make changes to the plan

to accommodate your own circumstances. The study programme indicates the notional hours

you would need to work through the learning outcomes in this module (if applicable).

7 PRACTICAL WORK AND WORK-INTEGRATED LEARNING

None

8 ASSESSMENT

8.1 Assessment plan

Assignments are deemed part of the learning material for this module. When you do the

assignments, study the reading texts, consult other sources, discuss the work with fellow

students or tutors, or do research. You are then actively engaged in learning. Pay attention to

the assessment criteria for each assignment. These criteria will help you to understand what is

required from you.

You may submit written assignments and assignments completed on mark-reading sheets

either by post or electronically via myUnisa. Assignments may not be submitted by fax or e-mail.

The brochure, my Studies @ Unisa (which you received with your study material), contains

detailed information and requirements as far as assignments are concerned.

Compulsory assignments

There are two compulsory assignments for this module. These assignments comprise multiple-

choice questions. The submission deadlines for each assignment in this module are

nonnegotiable. You must submit these assignments if you wish to gain admission to write the

examination. These assignments contribute to your year mark.

FIN2601/101

-7-

Year mark

Your year mark, based on the mark obtained for the two compulsory assignments, contributes

10% towards your final mark, and your examination mark contributes 90% to the final mark.

The combined weighted average of your year mark and the examination mark must be 50% or

higher to pass this module. However, you must obtain a minimum of 40% in the examination,

regardless of your year mark. If you obtain less than 40% in the examination, your year mark

will not be taken into account and you will fail.

For example: Assignment 1 mark = 50%

Assignment 2 mark = 90%

These marks contribute 50% to the final 10% of your year mark.

Assignment number

Mark

(%)

Weight

(%)

Total

1 50 50 25

2 90 50 45

70 x 10% of final = 7

Assume an examination mark of 50%. 90% of the examination mark = 45%. Final mark = (10% assignment mark) + (90% examination mark) = 7% + 45% = 52% You will need a final mark of at least 40% in order to qualify for a supplementary examination. Consult the brochure, my Studies @ Unisa (which you received with your study material), for general information and requirements as far as assignments are concerned.

-8-

8.2 General assignment numbers

Assignments are numbered consecutively, starting from 01.

8.2.1 Unique assignment numbers

Each assignment has been allocated a unique number in order to identify it in the Unisa assessment plan. ALWAYS indicate the correct unique number when you submit an assignment.

8.2.2 Due dates for assignments

You should preferably submit your assignments on https://my.unisa.ac.za, prior to the due date of the particular assignment. Do not wait until the due date becomes a problem. Technical problems with the computer servers of myUnisa may prevent you from submitting your assignment at the last minute. Please ensure that your assignments reach the Unisa main campus by the due dates. If you are unable to submit your assignments via myUnisa and need to mail the assignments in hard copy, you should leave enough time to accommodate the snailmail. No extension of due dates for assignments will be granted. These due dates have been set to allow you sufficient time to complete other assignments and to prepare for the examination.

Information about whether Unisa has received your assignment and the mark you obtained for an assignment is available on https://my.unisa.ac.za. 8.3 Submission of assignments

Via myUnisa:

Go to myUnisa at https://my.unisa.ac.za.

Log in with your student number and password.

Select the module.

Click on Assignments in the left-hand menu.

Click on the assignment number you want to submit.

Follow the instructions on the screen.

Only If you do not have access to the internet should you submit your assignment by means of a mark-reading sheet (for MCQs) or on hard paper copy (for essay-type questions) and mail it to Unisa. If you use a mark-reading sheet, remember to (1) use an HB pencil (2) indicate your student number and the above-mentioned unique number on the mark-

reading sheet

FIN2601/101

-9-

(3) follow the instructions for completing mark-reading sheets (Incomplete mark-reading sheets will be returned to you unmarked.)

(4) submit the assignment in good time (It must have reached the Unisa Main Campus by

the date indicated in the assignments below, otherwise it might not be in time to be marked by the Assignment Section.

-10-

8.4 Assignments

Assignment 01 COMPULSORY (First Semester only) This assignment has been designed to evaluate your knowledge of some of the fundamental

aspects of managerial finance as well as important concepts in finance. You have to study

Chapters 1, 2 and 4 of your prescribed book before you attempt to complete this assignment.

When you complete a mark-reading sheet or submit this assignment via myUnisa, be sure to

use the correct unique number (see below).

Due date Unique number

12 March 2013 222135

This assignment consists of 20 multiple-choice questions.

QUESTION 1 Which of the following is not an agency cost? (1) bonding and structuring expenses

(2) cost of goods sold

(3) monitoring expenses

(4) opportunity costs

QUESTION 2

How does the deductibility of expenses affect a companys after-tax cost?

(1) The after-tax cost increases.

(2) The after-tax cost decreases.

(3) It does not affect the after-tax cost.

(4) The effect on after-tax cost is undermined.

FIN2601/101

-11-

QUESTION 3

Which one of the following represents the true owner(s) of the company?

(1) board of directors

(2) chief executive officer

(3) shareholders

(4) creditors

QUESTION 4

Which is the best profit measure to determine how well a company performed in the relevant

industry?

(1) gross profit

(2) operating profit

(3) earnings before taxes

(4) net profit

The following information is available for Biking Accessories. Use this information to answer

Questions 5 to 9 below.

Sales R4 500 000

Inventory turnover 4,20

Total assets turnover 0,85

Earnings available for ordinary shareholders R900 000

Ordinary share equity R2 500 000

Book value of shares R6

Number of days in a year 365

-12-

QUESTION 5 Suppose the net profit margin of Biking Accessories declines, but the CEO plans to maintain the

companys return on shareholders equity. He must therefore...

(1) increase the companys utilisation of assets.

(2) reduce the amount of debt in the companys capital structure.

(3) increase the companys total assets.

(4) increase the companys total shareholders equity.

QUESTION 6 The average age of inventory (AAI) of a rival company is 90 days. The AAI of Biking

Accessories indicates that the company

(1) has a higher average number of days sales in inventory than the rival company.

(2) has a lower average number of days sales in inventory than the rival company.

(3) is less effective in utilising its inventory to generate sales.

(4) turns over its inventory more slowly than the rival company.

QUESTION 7 Assume that the total liability of Biking Accessories comes to R3 500 000. Also assume that the

average debt ratio in the industry is 50%. The current debt ratio for Biking Accessories therefore

indicates that it has

(1) less risk of becoming bankrupt compared to its competitors in the industry.

(2) a higher risk of becoming bankrupt compared to its competitors in the industry.

(3) half its assets financed by debt.

(4) all its assets financed by debt.

FIN2601/101

-13-

QUESTION 8 The return on investment (ROI) for Biking Accessories in the year before was 10%. What does

Biking Accessories current ROI indicate?

(1) Managements effectiveness in generating profits with the companys debt has improved.

(2) Managements effectiveness in generating profits with the companys available assets

has improved.


has deteriorated.


remains unchanged.

QUESTION 9 The price/earnings (P/E) ratio for Biking Accessories is currently 12.

Given this value, calculate the ordinary share price for Biking Accessories shares.

(1) R23, 52

(2) R23, 92

(3) R25, 52

(4) R29, 92

Use the following financial data for Brothers Green Co to answer Questions 10 to 11.

Net sales R100 000

Cost of goods sold R 45 000

Operating expenses R 40 000

Net income R 5 000

Total assets R 90 000

Total liabilities R 60 000

Current liabilities R 2 500

Inventory R 15 000

Current assets R 40 000

-14-

QUESTION 10

Brothers Greens quick ratio is

(1) 1, 00

(2) 1, 20

(3) 2, 00

(4) 2, 50

QUESTION 11

Brothers Greens inventory turnover is

(1) 0, 33

(2) 0, 50

(3) 3, 00

(4) 6, 00

QUESTION 12

Calculate the future value (FV) of R40 000 in 5 years, assuming that the interest rate is 6% per

year.

(1) R42 500,00

(2) R51 675,66

(3) R53 529,02

(4) R55 529,02

QUESTION 13

Calculate the future value of R95 000 received today, deposited into an account for 5 years,

paying a semi-annual interest of 10%.

(1) R101 552,61

(2) R121 246,74

(3) R124 529,02

(4) R154 744,99

FIN2601/101

-15-

QUESTION 14

Calculate the present value (PV) of R100 000 received 10 years from now, assuming the

interest rate is 5% per year.

(1) R52 442,87

(2) R61 391,33

(3) R62 441,34

(4) R73 345,20

QUESTION 15 The present value of R25 000 that will be received for 10 consecutive years at a discount rate of

17%, is best represented by which of the following amounts?

(1) R29 250

(2) R116 475

(3) R207 500

(4) R292 500

QUESTION 16

Nico de Beer borrows R70 000 from the bank at an 8% annual compounded interest rate. The

loan is to be repaid in three equal annual instalments. Calculate the balance after the second

instalment has been paid.

(1) R21 562,35

(2) R25 150,32

(3) R27 162,35

(4) R48 337,65

-16-

QUESTION 17

Jake would like to accumulate R100 000 by the end of three years from now, to buy a sport car

from his friend. He already has R25 000 and would like to save equal end-of-the-year deposits

to pay for the car. Calculate the amount he will have to deposit at the end of each year into an

account that pays 8% interest to buy the car.

(1) R21 102,51

(2) R30 803,35

(3) R34 057,69

(4) R43 442,10

QUESTION 18 An investment will pay you R30 000 at the end of this year, and R10 000 at the end of each of

the following four years. What is the present value of this investment, given that the interest rate

is 3% per year?

(1) R65 214,54

(2) R66 214,56

(3) R75 316,70

(4) R83 456,33

QUESTION 19

Determine the present value of the following cash-flow stream, and assume that the company

has an opportunity cost of 13%.

Year Amount (R)

1-5 15 000 per year

6-10 35 000 per year

(1) R113 902,43

(2) R115 573,90

(3) R116 322,20

(4) R119 573,90

FIN2601/101

-17-

QUESTION 20

John is saving money to buy a new bicycle that costs R2 000. He deposits R1 000 in a bank

account earning interest at 14% per year. Calculate how many years he will have to wait before

he has enough money to buy the bike.

(1) 3 years

(2) 5 years

(3) 7 years

(4) 10 years

-18-

Assignment 02 COMPULSORY (First Semester only) This assignment has been designed to evaluate your knowledge of some of the fundamental

aspects of managerial finance and important concepts in finance. You have to study





27 March 2013 398100


QUESTION 1 If a financial managers required rate of return increases for an increased risk, then he/she is

a

(1) risk-seeking manager.

(2) risk-indifferent manager.

(3) risk-averse manager.

(4) risk-control manager.

Use the following information to answer Questions 2 to 4: Risk Bank Limited is a successful investment bank. A new investment is being considered. The

following options are available:

Standard deviation (%)

Expected annual return on investment (%)

Investment A ? ?

Investment B 5,07 17,82

Investment C 4,65 15,22

Investment D 13,10 20,55

Investment E 12,54 18,62

FIN2601/101

-19-

Additional information regarding Investment A:

Possible annual return (%) Probability (%)

11 25

14 10

15 45

20 20

QUESTION 2

The expected rate of return on Investment A (rounded to two decimals) is

(1) 15,00%

(2) 20,00%

(3) 13,50%

(4) 14,90%

QUESTION 3

The standard deviation on Investment A (rounded to two decimals) is

(1) 3,86

(2) 3,01

(3) 6,48

(4) 9,09

QUESTION 4 The investment a rational financial manager would choose if he/she had to choose between Investments B, C, D or E is

(1) Investment B

(2) Investment C

(3) Investment D

(4) Investment E

-20-

QUESTION 5

Asset A has a beta value of 1,5. The risk-free rate of return is 4%, and the return on the market

portfolio is 16%. What is the assets market risk premium?

(1) 9%

(2) 11%

(3) 12%

(4) 16%

QUESTION 6 The beta coefficient

(1) represents the portion of an assets risk that is associated with random causes.

(2) is a relative measure of non-diversifiable risk.

(3) is sometimes called unsystematic risk.

(4) is attributable to a company-specific event.

QUESTION 7 You are considering an investment in Winterberg Ltd. The risk-free rate of return is 7%. The

beta value of the share is 0,6 and the market rate of return (Rm) is 10%. To which is the required

rate of return (Rj) the closest?

(1) 5,70%

(2) 8,80%

(3) 9,00%

(4) 12,70%

FIN2601/101

-21-

QUESTION 8 Consider a zero-coupon bond with a face value of R1 000. Nine years are left until maturity.

What is the market price of this bond if it has a yield-to-maturity of 10%?

(1) R0

(2) R424

(3) R605

(4) R1 000

QUESTION 9

What is the annual coupon rate of a 20-year, R1 000 par value debenture of which the current

price is R1 300, with interest paid every six months, and a simple yield of 12%?

(1) 4,39%

(2) 8,79%

(3) 10,32%

(4) 11,00%

QUESTION 10 The ABC Bond Corporation issued a R1 000 par value bond bearing a coupon rate of 14%.

Coupons are paid quarterly. This bond has three years remaining to maturity and is currently

priced at R940. What is its annual yield-to-maturity (YTM)?

(1) 8,29%

(2) 10,64%

(3) 16,58%

(4) 19,34%

-22-

QUESTION 11

Which type of bonds have short maturities (ie typically one to five years), can be renewed for a

similar period if the holder chooses, and are similar to a floating-rate bond?

(1) junk bonds

(2) puttable bonds

(3) floating-rate bonds

(4) extendible notes

QUESTION 12

What is the current price of a R1 000 par value bond that matures in 12 years, has a coupon

rate of 14%, is paid semi-annually, and has a yield-to-maturity of 13%?

(1) R604

(2) R1 090

(3) R1 060

(4) R1 073

QUESTION 13

If a corporate bond is issued with a coupon rate that varies directly from the required return, the

price of the bond will

(1) equal the face value.

(2) be less than the face value.

(3) exceed the face value.

(4) be greater than or less than the face value, depending on how interest rates vary.

FIN2601/101

-23-

QUESTION 14

When a bond is valued, the characteristics of the bond that remain fixed are all of the following,

except the

(1) coupon rate.

(2) price.

(3) face value.

(4) interest payment.

QUESTION 15

John would like to buy a share of Rocket Launcher Ltd for R45,00. He expects dividends of

R3,00 in year one and R5,00 in year two. He expects to sell the stock for R58,00 in two years.

His current required return is 18%. According to this information, John should buy the share,

since

(1) it is currently overvalued.

(2) it is currently undervalued.

(3) it is currently priced at R48,78.

(4) it will be priced at R48,78 in two years time.

QUESTION 16

All of the following may be characteristics of preferred stock, except the following:

(1) callable

(2) no maturity date

(3) tax-deductible dividends

(4) convertible

-24-

QUESTION 17

A company expects a dividend of R1,20 per share next year, a zero growth rate of dividends,

and a required return of 10%. The value of a share of this companys common stock is

(1) R10

(2) R12

(3) R100

(4) R120

QUESTION 18

Emmy Lou Inc expects a dividend of R5,60 per share next year, a growth rate of 10% for

dividends, and a required return of 20%. Calculate the value of one share of Emmy Lou Inc.

(1) R18,67

(2) R22,40

(3) R28,00

(4) R56,00

QUESTION 19 Nico Custom Cycles common stock currently pays no dividends. The company plans to begin

paying dividends in three years time. The first dividend will be R3,00 after which dividends will

grow at 5% per year. Given a required return of 15%, what would you pay for the stock today?

(1) R19,73

(2) R22,68

(3) R26,00

(4) R30,00

FIN2601/101

-25-

QUESTION 20 At year-end, Tangshang Companys balance sheet showed total assets of R60 million, total

liabilities (including preferred stock) of R45 million, and 100 000 shares of common stock

outstanding. Use this information to calculate Tangshangs book value per share of common

stock.

(1) R10,50

(2) R15,00

(3) R105,00

(4) R150,00

-26-

Assignment 01 COMPULSORY (Second Semester only)

This assignment has been designed to evaluate your knowledge of some of the fundamental






23 August 2013 687860

QUESTION 1

Which of the following actions is consistent with social responsibility but is necessarily

inconsistent with stockholder wealth maximisation?

(1) Investing in a smokestack "scrubber" to reduce the companys air pollution as

mandated by law.

(2) Voluntarily installing expensive machinery to treat effluent which is currently dumped

into a river where it is ruining the drinking water of the community next to the plant.

(3) Investing in a smokestack filter to reduce sulphurdioxide emissions. This installation

would reduce the current pollution tax levied by the state.

(4) Each of the above actions is consistent with social responsibility. However, none is

necessarily inconsistent with stockholder wealth maximisation.

FIN2601/101

-27-

QUESTION 2

Maximo Corporation has recently been declared bankrupt. The price of Maximo's shares has

dropped from approximately R10 per share a year ago to R1 today. The shareholders are very

unhappy about the drastic drop in their shareholding investment. Moreover, while the financial

position of the company was deteriorating, Maximos executives increased their salaries and

perquisites substantially. Nothing they did violate legislation or was considered unethical. How

would you best describe this situation?

(1) an accounting glitch

(2) the agency problem

(3) inappropriate use of tax laws

(4) a fraudulent activity and unethical conduct

QUESTION 3

Compared to corporations, what is the primary disadvantage of partnerships as a form of doing business?

(1) The tax rates applied to partnership are higher than the tax rates applied to corporations.

(2) All dividends paid to the owners of a partnership are taxed twice once at the

partnership level and once at the individual level.

(3) Partnerships are generally much easier to form (start up) than corporations.

(4) The partners have unlimited liability when it comes to business obligations, whereas the

owners of a corporation have limited liability.

QUESTION 4

A company has a profit margin of 15% on sales of R20 million. If the companys debts are

R7,5 million, its total assets are R22,5 million, and an after-tax interest cost on total debt of 5%,

what is the companys return on assets (ROA)?

(1) 8,4% (2) 10,9% (3) 12,0% (4)

13,3%

-28-

QUESTION 5

The Caprivi Corporation faces total interest charges of R10 000 per year, annual sales of

R1 million, a tax rate of 40%, and a net profit margin of 6%. What is the Caprivi Corporations

times-interest-earned ratio?

(1) 7,0%

(2) 10,0%

(3) 11,0%

(4) 16,0%

QUESTION 6

The Meryl Corporation's ordinary shares are currently selling for R100 per share, which

represents a P/E ratio of 10. If the corporation has 100 ordinary shares outstanding, a return on

equity of 20%, and a debt ratio of 60%, what is Meryls return on total assets (ROA)?

(1) 8,0%

(2) 10,0%

(3) 12,0%

(4) 16,7%

QUESTION 7 Gringo Supplies has a current ratio of 3,0, a quick ratio of 2,4, and an inventory turnover ratio of

6. Gringo Supplies total assets come to R1 million and its debt ratio is 0,20. The company has

no long-term debt. What is Gringo Supplies sales figure if the total cost of goods sold is 75% of

sales?

FIN2601/101

-29-

(1) R 720 000

(2) R 960 000

(3) R1 200 000

(4) R1 620 000

QUESTION 8 The Cruywagen Company has the following characteristics:

Sales: R1 000

Total assets: R1 000

Total debt/Total assets: 35%

Earnings before interest and tax (EBIT): R200

Tax rate: 40%

Interest rate on total debt: 4,57%

What is the Cruywagen Companys return on equity (ROE)?

(1) 11,04%

(2) 12,31%

(3) 16,99%

(4) 28,31%

-30-

QUESTION 9 An analyst gathered the following data for a company:

2010 2011 2012

Return on equity 19,8% 20,0% 22,0%

Return on total assets 8,1% 8,0% 7,9%

Total asset turnover 2,0 2,0 2,1

Based on the above information only, the most appropriate conclusion is that, over the period

2010 to 2012, this company's

(1) net profit margin and financial leverage decreased.

(2) net profit margin and financial leverage increased.

(3) net profit margin decreased, but its financial leverage increased.

(4) net profit margin increased, but its financial leverage decreased.

QUESTION 10

Use the following information to calculate the market price per share of the Eastdale

Corporation:

Earnings after interest and taxes: R200 000

Earnings per share: R2,00

Stockholders' equity: R2 000 000

Market/Book ratio: 0,20

(1) R2

(2) R4

(3) R8

(4) R20

FIN2601/101

-31-

QUESTION 11 A recent advertisement in the financial section of the Business Chronicle carried the following

claim: "Invest your money with us at 14%, compounded annually, and we guarantee to double

your money sooner than you imagine." Ignoring taxes, how long would it take to double your

money at a simple rate of 14%, compounded annually?

(1) approximately 3,5 years

(2) approximately 5 years

(3) exactly 7 years

(4) approximately 10 years

QUESTION 12

On the day Harry was born, his parents deposited R10 000 in an investment account that

promised to pay a fixed interest rate of 4% per year. How much money will Harry have in this

account when he turns 18?

(1) R17 200

(2) R20 260

(3) R28 040

(4) R48 060

QUESTION 13

Helen is saving to start a business. If she invests R100 000 in a savings account now, which of

the following is the minimum interest rate required to ensure that she has R250 000 in her

account in ten years time?

(1) 2,5%

(2) 6,4%

(3) 9,6%

(4) 10,2%

-32-

QUESTION 14

An investment pays you R20 000 at the end of this year, and R10 000 at the end of each of the

next four years. What is the present value (PV) of this investment, given that the interest rate is

4% per year?

(1) R42 150

(2) R45 913

(3) R54 134

(4) R58 614

QUESTION 15

A bank is negotiating a loan. The loan can either be paid off as a lump sum of R100 000 after

five years, or in equal payments at the end of each of the next five years. If the interest rate on

the loan is 10%, what annual payments should be made so that both forms of payment are

equivalent?

(1) R12 000

(2) R16 380

(3) R19 588

(4) R20 000

QUESTION 16

Your company is planning to borrow R1 million at a 5-year, 15%, annual payment, fully

amortised term loan. How much of the payment made at the end of the second year will

represent repayment of the principal?

(1) 29,83%

(2) 35,02%

(3) 57,18%

(4) 64,45%

FIN2601/101

-33-

QUESTION 17

Courage Bravo, who is 60, plans to retire in two years, and he expects to live independently for

three years. He wants a retirement income which has, in the first year, the same purchasing

power as R400 000 has today. However, his retirement income will be a fixed amount, so his

real income will decline over time. His retirement income will start the day he retires, two years

from today, and he will receive a total of three retirement payments. Inflation is expected to be

constant at 5%. Courage has R1 million in savings and he can earn 8% on his savings now and

in future. How much must he save each year, starting today, to meet his retirement goals?

(1) R18 630

(2) R20 340

(3) R27 160

(4) R53 500

QUESTION 18 Kelly, a recent finance graduate, plans to buy a house valued at R1,5 million. He has applied for

a mortgage loan from his bank and has been requested to pay a 20% deposit, with the balance

financed at 9% over 30 years. What would his monthly mortgage repayment be?

(1) R7 993

(2) R8 952

(3) R9 656

(4) R10 234

-34-

QUESTION 19 Calculate the present value of the following cash-flow stream by assuming that the company

has an opportunity cost of 9%.

(1) R16 896

(2) R25 997

(3) R120 850

(4) R121 555

QUESTION 20 What is the effective annual rate for a credit card that charges 18%, compounded, monthly?

(1) 15,38%

(2) 18,81%

(3) 19,56%

(4) 20,26%

Years Amount (R)

15 15 000 per year

610 25 000 per year

FIN2601/101

-35-

Assignment 02 COMPULSORY (Second Semester only)

This assignment has been designed to evaluate your knowledge of some of the fundamental






20 September 2013 784706


QUESTION 1

Asset A has a beta value of 0,8. The risk-free rate of return is 4% and the return on the market

portfolio is 11%. What is the assets market risk premium?

(1) 5,60%

(2) 7,00%

(3) 9,60%

(4) 15,00%

-36-

QUESTION 2

Which of the following statements is false?

(1) The coefficient of variation is a better measure of risk than the standard deviation if the

expected returns of the securities being compared differ significantly.

(2) Managers cannot act in the best interests of their shareholders unless they know their

shareholders' average time preference for receiving their money and which risks a typical

shareholder is prepared to accept.

(3) Companies should deliberately increase their risk relative to the market if the actions that

increase the risk also increase the expected rate of return on the companys assets by

enough to compensate for the higher risk.

(4) If the expected rate of return on a particular investment, as seen by the marginal investor,

exceeds its required rate of return, there would soon be an increase in demand for the

investment, and the price will likely increase until a price is established that equates the

expected return with the required return.

QUESTION 3

What is the standard deviation () of the returns for Asset A below?

Pr Return 0,10 -10%

0,40 25%

0,50 10%

(1) 10,67%

(2) 10,71%

(3) 14,82%

(4) 18,19%

FIN2601/101

-37-

QUESTION 4 Assume that a new law is passed in South Africa which limits investors to only one asset. A risk-

averse investor is considering two possible assets to comply. The assets' possible returns and

related probabilities (ie the probability distributions) are as follows:

ASSET X ASSET X ASSET Y ASSET Y

Probability Return (%) Probability Return (%)

0,10 -3 0,05 -3

0,10 2 0,10 2

0,25 5 0,30 5

0,25 8 0,30 8

0,30 10 0,25 10

Which asset would the risk-averse investor prefer?

(1) Asset X, since its expected return is higher.

(2) Asset Y, since its beta value is probably lower.

(3) Asset X, since its standard deviation is lower.

(4) Asset Y, since its coefficient of variation is lower.

QUESTION 5 As the investment banker for Unisa Inc, you have to construct a portfolio for a risk-averse client.

You receive R100 000 as an initial investment, and decide to invest in Max, Mak & Yun shares

as well as in some government treasury bills for short-term liquidity. An amount of R10 000 will

be allocated to Max shares with a beta value of 2,0; R30 000 will be allocated to Mak shares

with a beta value of 1,5; R15 000 will be allocated to Yun shares with a beta value of 0,5 and

the balance will be invested in treasury bills. What is the portfolio beta?

(1) 0,725

(2) 1,333

(3) 1,725

(4) 4,000

-38-

QUESTION 6 Consider the following information on the Scientific Investment Fund of South Africa:

Asset Investment Beta A 200 000 1,5

B 300 000 -0,5

C 500 000 1,25

D 1 000 000 0,75

You are also told that the Scientific Investment Fund of South Africa has a total investment of

R2 million. The market requires a return of 15%, and the three-month Treasury Bill rate is 7%.

What would the required rate of return of this Fund be?

(1) 10,3%

(2) 12,7%

(3) 13,1%

(4) 14,2%

QUESTION 7 If the risk-free rate is 7%, the expected market return is 10%, and the expected return on

Security J is 13, what is the beta value of Security J?

(1) 1,0

(2) 2,0

(3) 3,0

(4) 4,0

QUESTION 8

Which type of investor would most likely purchase a zero-coupon bond?

(1) retired individuals seeking income for current consumption

(2) individuals in high tax brackets

(3) tax-free investors such as pension funds

(4) risk-averse investors anticipating increases in interest rates

FIN2601/101

-39-

QUESTION 9 Which of the following statements is false?

(1) All bonds sold outside the country of the borrower are called international bonds.

(2) Foreign bonds and Eurobonds are two important types of international bonds.

(3) Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of

the country in which the issue is sold.

(4) The term Eurobond specifically applies to foreign bonds denominated in US dollars.

QUESTION 10

If you buy a bond that is selling for less than its face value, or maturity value, what will happen

to the price (value) of the bond as the maturity date nears and if market interest rates do not

change during the life of the bond?

(1) Because interest rates remain constant, nothing happens to the market value of the

bond.

(2) The price of the bond should decrease even further below the bonds face value because

the rates in the market are too high.

(3) The price of the bond will increase as the bond gets closer to its maturity because the

bonds value has to equal its face value at maturity.

(4) Inflationary expectations would result in the bond value decreasing below its face value

due to the increased perceived risk.

QUESTION 11 You are considering the purchase of a R1 000 par value bond that pays interest of R70 semi-

annually and has 10 years to go before it matures. If you buy this bond, you expect to hold it for

5 years and then to sell it in the market. Investors currently require a simple annual rate of 16%,

but you expect the market to require a rate of only 12% when you sell the bond due to a general

decline in interest rates. How much would you be willing to pay for this bond?

(1) R842,00

(2) R966, 69

(3) R1 115, 81

(4) R1 359,26

-40-

QUESTION 12 If interest rates drop from 8% to 7%, which of the following bonds would have the largest

percentage increase in value?

(1) a 10-year zero-coupon bond

(2) a 10-year bond with a 10% semi-annual coupon

(3) a 5-year zero-coupon bond

(4) a 5-year bond with a 12% annual coupon

QUESTION 13 Assuming other factors remain constant, which of the following statements about bonds is not true?

(1) From a borrowers perspective, interest paid on bonds is tax-deductible.

(2) A 20-year zero-coupon bond has less reinvestment rate risk than a 20-year coupon bond.

(3) For any given maturity, a given percentage point increase in the interest rate causes a

smaller dollar capital loss than the capital gain stemming from an identical decrease in

the interest rate.

(4) For a given bond of any maturity, a given percentage point increase in the interest rate

causes a larger dollar capital loss than the capital gain stemming from an identical

decrease in the interest rate.

QUESTION 14 MicroManage (Pty) Ltd has 10 million authorised ordinary shares, and 8 million shares

outstanding, each with a par value of R1. The companys additional paid-in capital account has

a balance of R18 million. The previous years retained earnings account was R124 million. In

the year just ended, MicroManage generated a net income of R16 million, and the company has

a dividend payout ratio of 40%. On what will MicroManages book value per share be based in

the final year-end balance sheet?

FIN2601/101

-41-

(1) R15,00

(2) R18,75

(3) R19,95

(4) R20,75

QUESTION 15 One share of preference shares pays an annual dividend of R6 per share. If investors require a

12% rate return, what should the price of this preference share be?

(1) R2,00

(2) R6,72

(3) R50,00

(4) R57,25

QUESTION 16 You are given the following information:

(1) The Treasury Bill rate is 5%.

(2) The required return on the market is 8%.

(3) The expected growth rate for the company is 4%.

(4) The last dividend paid was R0,80.

(5) The beta value is 1,3.

Now, assume the following changes occur:

(a) The inflation premium drops by 1%.

(b) An increased degree of risk aversion causes the required return on the market to go to

10% after adjustment for the changed inflation premium.

(c) The expected growth rate increases to 6%.

(d) The beta value rises to 1,5.

What would the change in the share price be, assuming that the share was in equilibrium before

the changes?

-42-

(1) R16,97

(2) R4,87

(3) +R6,28

(4) +R12,11

QUESTION 17 Consider an ordinary share at a current price of R82,50. It is expected to grow at a constant rate

of 10%. If you require a 14% rate of return, what is the current dividend on this share?

(1) R3,00

(2) R3,81

(3) R4,29

(4) R4,75

QUESTION 18 What is the real rate of interest on your investment if the current inflation rate is 4% and you

have an investment opportunity that pays 10%?

(1) 5,8%

(2) 6,0%

(3) 10,0%

(4) 14,0%

QUESTION 19 Burger Inc has just paid a dividend of R2. Its shares are now selling for R48 per share. The

company is half as risky as the market. The expected return in the market is 14%, and the yield

on the three-month Treasury Bill is 11%. If the market is in equilibrium, what is the expected

growth rate?

(1) -2%

(2) 4%

(3) 8%

(4) 12,5%

FIN2601/101

-43-

QUESTION 20 Da Gama (Pty) Ltd has a current dividend of R3. Analysts expect that the dividend will grow at a

rate of 25% per annum for the next three years. It will then grow at a constant 10% per annum.

The companys cost of equity capital is estimated to be 15%. What is the current share price of

Da Gama?

(1) R88,55

(2) R95,42

(3) R110,00

(4) R128,91

-44-

Assignment 03 SELF-EVALUATION (NOT to be submitted)

QUESTION 1

(1) Construct the DuPont system of analysis using the following financial data for Alpha-

Omega Industries. (11)

(2) Determine which areas of the company need further analysis, comment on these areas,

and indicate how the company can improve on them. (4)

Key financial data of Alpha-Omega Industries Sales R4 500 000

Profit after tax R 337 500

Total assets R6 750 000

Total liabilities R3 375 000

Industry averages Total asset turnover 0,71

Debt ratio 33%

Financial leverage multiplier 1,5

Return on total assets 6,75%

Return on equity 10%

Net profit margin 9,5%

Answer Ratios for Alpha-Omega Industries:

Total asset turnover = 000,750,6000,500,4 = 0,67 (2)

Debt ratio =000,750,6000,375,3 = 50% (2)

FIN2601/101

-45-

Financial leverage multiplier = 5.01

1

= 2 (2)

ROA = 000,750,6500,337 = 5% (2)

ROE = ROA Financial leverage multiplier = 10% (2)

Net profit margin = 000,500,4500,337 = 7,5% (1)

DuPont system of analysis

According to the return on equity, Alpha-Omega Industries performs equally/at par with

the industry.

However, when the financial data are further dissected into the three key components of

the DuPont system (a profit-on-sale, efficiency-of-asset use, and a use-of-leverage

component), some areas can be improved.

Alpha-Omega Industries has a lower net profit margin and return on total assets than the industry average.

Nevertheless, the company makes up for the low profit margin through excessive use of

leverage (a 50% debt ratio versus 33% for the industry).

Financial risk can be reduced with the same return on equity by increasing the net profit

margin and reducing debt.

-46-

QUESTION 2

Champion Breweries must choose between two asset purchases. The annual rate of return and

the related probabilities below summarise the companys analysis. (15)

Asset A Asset B

Rate of return Probability Rate of return Probability

10% 30% 5% 40%

15% 40% 15% 20%

20% 30% 25% 40%

(a) Compute the expected rate of return for each asset. (2)

(b) Calculate the standard deviation of the expected return for each asset. (8)

(c) Calculate the coefficient of variation of the return for each asset. (2)

(d) Which asset would you advise Champion to select? Why? (3)

Answers

(a)

Expected return A = 15%; (1)

FIN2601/101

-47-

Expected return B = 15% (1)

(b) Asset A (10% - 15%)^2 0,30 = 7,5% (1)

(15% - 15%)^2 0,40 = 0% (1)

(20% - 15%)^2 0,30 = 7,5% (1)

15%

Standard deviation of A = 15 = 3,87% (1)

Asset B (5% - 15%)^2 0,40 = 40% (1)

(15% - 15%)^2 0,20 = 0% (1)

(25% - 15%)^2 0,40 = 40% (1)

80%

Standard deviation of B = 80 = 8,94% (1)

(c) CVA = 3,87/15 = 0,26; (1)

CVB = 8,94/15 = 0,60 (1)

(d) Asset A (1), for 15% rate of return (1), and lesser risk as reflected by the lower CV (1).

QUESTION 3

(1) State the efficient market hypothesis (EMH) propositions and briefly outline their

implications for investors. (6)

Answers

(a) Weak (2)

-48-

All information contained in past price movements is fully reflected in current market prices. Therefore information on past trends is of no use to an investor who intends to

select winning investments .

(b) Semistrong (2)

Current market prices reflect all information available to the public. In this case it does not help an investor to scrutinise published data in a corporations financial statements

to look for abnormal returns, because market prices will adjust to good news or bad news contained in such reports as soon as they are made public.

(c) Strong (2)

Current market prices reflect all pertinent information, whether publicly available or privately held. The implication for investors would be that it is impossible to realise abnormal returns even if insider trading is possible

(2) The Pitco Corporations shares are currently selling for R160,00 per share, and the companys dividends are expected to grow by 5% indefinitely. In addition, the Pitco Corporations most recent dividend was R5,50. The expected risk-free rate of return is 3%, the expected market return is 8%, and the Pitco Corporation has a beta value of

1,20.

(a) Determine the expected return based on the dividend valuation model. (4)

(b) Determine the required return based on the Capital Asset Pricing Model (CAPM). (3)

(c) Would the Pitco Corporation be a good investment at this time? Explain your answer. (2)

Answers

(a) The expected return is calculated below: (4)

FIN2601/101

-49-

1

0

5 . 5 0 (1 0 . 0 5 ) 0 . 0 51 6 0

0 . 0 8 6 18 , 6 1 %

eDk gP

= +

+= +

=

=

(Allocate 1 mark for correct formula, 1 mark for calculating D1, and 2 marks for the final answer.)

(b) The required return is calculated below: (3)

(Allocate 1 mark for correct formula, 1 mark for

substituting correctly, and 1 mark for the final

answer.)

(c) Pitco would not be a good investment as its expected return of 8,61% is less than the required return of 9,0%. If these shares were bought, the investor would suffer a loss. (2)

9 OTHER ASSESSMENT METHODS

None

10 EXAMINATION

Examination admission will be granted to all students who submit the compulsory assignment.

Students who do not submit the compulsory assignment will not be allowed to write the examination.

The provisional examination dates have been published on https://my.unisa.ac.za.

The examination paper for FIN2601 will consist of Sections A and B.Students should try to

answer all the questions. Section A will contain 40 multiple-choice questions, and Section B will

contain at most two essay questions. No equations will be provided in the examination paper.

( )0 . 0 3 1 . 2 ( 0 . 0 8 0 . 0 3 )0 . 0 3 1 . 2 ( 0 . 0 5 )0 . 0 99 %

e f m fr r r r= + = +

= +

=

=

-50-

Students must receive at least 40% to qualify for admission to write the supplementary

examination. Details about the procedure and the cost for re-marking examination scripts are

listed on myUnisa (https://my.unisa.ac.za).

11 FREQUENTLY ASKED QUESTIONS

SECTION A: ADMINISTRATIVE MATTERS

(1) Matters pertaining to registration

What should I do if any of my personal details (name, address, etc) have been incorrectly

captured during the registration process?

Please use myUnisa (https://my.unisa.ac.za) to rectify all errors. Or you may send us an

e-mail to [email protected]. Or mail us a letter addressed to The Registrar, PO Box 392,

Unisa, 0003. Please remember to quote your student number in all your correspondence

with the University.

How do I obtain items that were out of stock when I registered?

Please use the internet facility, https://my.unisa.ac.za, to download copies of all study

material. Or you may send us an e-mail to [email protected]. Please remember to

quote your student number in all correspondence with the University. Please allow about

four weeks for delivery of outstanding items before you contacting Unisa about out-of-stock items.

(2) Assignments

My assignment is late because ... Can I submit it at a later date?

It is your responsibility to ensure that your assignments are submitted on myUnisa or

reach the Unisa Main Campus on or before the closing date. Please do not call us to request an extension for submission of an assignment. When you receive the tutorial

letter containing the solutions, you will know that you definitely can no longer submit the

assignment.

Are the assignments of this module compulsory?

FIN2601/101

-51-

The assignments are compulsory. You should use the assignments to prepare for the

examination.

Do the marks I obtain for assignments count towards the final mark?

The assignment marks do count towards the final marks, as explained in this tutorial

letter.

Who do I contact to find out if Unisa has received the assignment(s) I sent by mail?

Preferably submit your assignments via myUnisa. If you do not have access to the

internet and post your assignments to Unisa, send an sms to 43584 to check whether

Unisa has received your assignment(s).

What do I do if my assignment goes missing in the mail?

Preferably submit your assignments via myUnisa. Always make a copy of your

assignment and keep it in a safe place in case you need to submit a duplicate copy.

Can I submit my assignments by e-mail?

NO. All assignments must either be submitted via myUnisa or posted by snail mail.

Assignments e-mailed to lecturers will not be marked.

How long do I have to wait before I can expect my assignment(s) results?

We aim to have assignments marked within three weeks after each due date. Visit https://my.unisa.ac.za to determine the mark you received. Allow an additional week or

two for the post office to deliver the results to your postal address.

All assignment results are returned to the postal address you provided when you

registered. Please do not call us to enquire about your assignment before four weeks after the due date for submission.

Can I expect my assignment to be returned sooner if I submit it well before the due date?

The marking of assignments normally starts on the due dates indicated in this tutorial

letter. Assignments are not marked or returned prior to the due dates.

What mark did I obtain for my assignment(s)?

Register as a user of the myUnisa facility and visit https://my.unisa.ac.za to find out the

mark you received for your assignment(s).

-52-

(3) Examination

What happens if I am unable to write the examination because of ill health, work

commitments or another crisis?

All requests for aegrotat examinations have to be in writing, addressed to the Head:

Examinations, PO Box 392, Unisa, 0003, or to [email protected]. A fee is payable for

such requests, and the amount payable is determined by the Examination Section.

What happens if I fail any papers?

Students who fail any of the papers may be granted admission to write the

supplementary examination scheduled for the next examination, provided they received a

final mark of at least 40%. All enquiries in this regard should be addressed to the Head:

Examinations, PO Box 392, Unisa, 0003, or to [email protected].

What will happen if I do not write any of the papers during the supplementary

examination?

In that case you will have to obtain a registration form, complete it, pay the required fee,

and register again.

What do I need to bring to the examination venue?

Bring your identity document (ID), your student card, an HB pencil, a black pen, a

financial calculator, a ruler, eraser, and pencil sharpener.

Will it be an open-book examination?

No

Could you give me an idea of the scope of the examination paper?

The examination paper is based on your prescribed book and the learning outcomes

provided in your study guide. Every learning outcome statement and assessment

criterion may be used to set examination questions. Please do not call us to enquire

about the scope of the examination paper.

FIN2601/101

-53-

(4) Results

I am going to be away when the examination results are released. Could you please tell

me what mark I received for this paper?

The results should be available four weeks after completion of the examination period. Please do not call the lecturers for your results.

How will the results be announced?

The results are mailed to students. However, the results are also published on myUnisa,

https://my.unisa.ac.za, and on the MTN results facility, cellular number 083 1234.

(5) Study guide and tutorial letters

I have lost my study guide and tutorial letters. Could the University please mail or fax me

copies?

Please download a copy from myUnisa. Register as a user at https://my.unisa.ac.za. The

lecturers do not mail or fax copies to students. You may also order replacement copies of

study guides from Unisas Despatch Department. Please send an e-mail to

[email protected] or a letter to The Head: Despatch, PO Box 392, Unisa, 0003.

(6) Changes to registration details

What do I do if I want to add or cancel modules?

Please update your details on myUnisa. Or you may send an e-mail, facsimile or letter to

indicate changes to your registration details. All such changes must be completed two

months before the examination. Please send an e-mail to [email protected]. Or mail a

letter addressed to The Registrar, Box 392, Unisa, 0003. Please remember to quote your

student number in all your correspondence with the University.

(7) Accounts

What do I do if I do not agree with my account statement?

Please send a letter addressed to The Head, Student Accounts, Box 392, Unisa, 0003.

Or send an e-mail to [email protected].

-54-

Please provide a copy of your receipt(s), deposit slips or electronic funds transfers (EFT)

as proof of payment, and remember to add your student number.

Will the payment immediately appear on my account statement?

Please note that your payment will only be reflected on your next account statement.

SECTION B: ACADEMIC MATTERS

(1) The prescribed book

May I use other relevant books?

We strongly recommend that you use the prescribed book. You are welcome to consult

additional reading material, but the examination paper will be based on the prescribed

book.

Which specific pages do I need to study and which can I leave out?

The chapters you have to study are indicated in your study guide. The study guide will

clearly state whether some pages may be left out. You should focus on achieving the

learning outcomes.

Could you highlight the most important aspects in each chapter?

Some students are inclined to study only the most important aspects. This may prove

disastrous in the examination. All aspects of the prescribed chapters identified by way of

the learning outcome statements should be deemed important for examination purposes.

(2) Calculators

Am I allowed to use a calculator?

Yes. In fact, we encourage you to use a financial calculator.

I have a scientific calculator. Will it be sufficient for this paper?

No. Please use a financial calculator.

FIN2601/101

-55-

Which calculator is prescribed or recommended?

We recommend the HP10-B II+.

# You may purchase the recommended calculator from the following list of suppliers

Game Stores Country Wide

Incredible Connection Country Wide

Van Schaik Country Wide

Juta Stores Country Wide

Web stores:

Kalahari http://www.kalahari.com/

Digital Planet http://digitalplanet.co.za/

Take a lot.com http://www.takealot.com/

MyCalculatorhttp://www.mycalculator.co.za/

Am I allowed to use a programmable calculator in the exam?

No.

(3) Supplementary books and videos

Are there supplementary books and videos I can use?

No supplementary books and videos are prescribed.

I would like to do some additional exercises and calculations. Could you send me the

tutorial letters of 20..?

Because of limited storage space at Unisa, no tutorial letters from previous years are

kept and/or made available to students. Visit myUnisa for additional resources.

-56-

(4) Contact with fellow students

I wish to contact other students in my area who enrolled for this module. Would you

please provide their contact details?

Contact may be established with fellow students at the discussion forum and blog on

myUnisa. Because of the constitutional right to privacy, we may not disclose the details of

students to others.

(5) Examination

Are any old examination papers available?

Previous examination papers are published on myUnisa, but no memoranda are

available. Questions will not necessarily be repeated in subsequent examination papers,

and students are warned not to rely on old examination papers in order to pass the

module.

What will the format of the examination paper be like?

The format of the examination paper will be confirmed in one of the tutorial letters

(normally Tutorial Letter 201) which is sent to you during the semester/year.

Will the examination paper contain any theory questions or will there only be calculations

and interpretations?

Most of the questions involve theory, applications, calculations and interpretations.

Will all the equations be provided as an annexure to the examination paper?

The equations will not be provided as part of the examination paper. You must be able to

apply the equations in the exam. No marks are awarded for quoting equations in the examination script.

If I study only the assignment questions, will I be adequately prepared for the

examination?

No. It is unlikely that you will be adequately prepared if you study only the assignment

questions. The assignment questions represent a sample of the work and cannot be

regarded as representative of all the study material.

FIN2601/101

-57-

Can you give me the scope of or any hints for the exam?

No hints are provided to students. Please do not call the lecturers about the scope of

or hints for the exam. Base your preparation for the examination on the learning

outcome statements.

12 CONCLUSION

This tutorial letter contains the purpose and outcomes of the module. The contact details of the

lecturer(s) have been provided, as were module-related resources and student support

services.

It is important to prepare a study plan for yourself. Devote 120 hours to this module in order to

be successful in the examination.

Details of your assessment have been provided, including your assignments for the

semester/year.

Some frequently asked questions (FAQs) have been provided in order to save you a telephone

call or e-mail message.

In Section 13 (below) of this tutorial letter we provide a list and details of the official bookstores

where you can purchase the prescribed book for this module.

We wish you the best with your studies!

Mr AB Sibindi and Mr GPM Grebe Your Lecturers

UNISA 2013

101_2013_3_e

Documents

module practical work

modulerelated resources

modulespecific study

assessment plan

submission of assignments

general assignment numbers

unique assignment numbers

risk management