TOPIC 1

 OVERVIEW OF FINANCIAL MANAGEMENT

QUESTION 1

August 2024 Question One B

The principles that govern all ethical behaviour for finance managers in practice and in business helps them to navigate the complexity of their work.

Required:

In reference to the above statement, explain THREE fundamental principles of ethical behaviour.      (6 marks)

 

QUESTION 2

April 2024 Question One A

In relation to agency theory:

1. Highlight THREE types of conflicts between shareholders and government. (3 marks)
2. Propose THREE solutions to the conflicts identified in (a) (i) above.    (3 marks)

 

QUESTION 3

December 2023 Question One A

Explain FOUR corporate objectives that may conflict with the financial objective of a firm.        (8 marks)

 

QUESTION 4

August 2023 Question One A

Outline FOUR limitations of profit maximisation as a financial goal of a firm.   (4 marks)

 

QUESTION 5

April 2023 Question One A

Management of a limited liability company is appointed to promote and protect shareholders’ interest in the performance of their functions. The aim is to maximise shareholders’value. The management, however, could have interest that might be in conflict with shareholders’ interest.

 

Required:

In reference to the above statement:

• Identify this type of conflict in modern day financial management of a firm.(1 mark)

• Explain THREE factors that could contribute to the conflict identified in (a) (i) above.        (3 marks)
• As a financial management professional, explain FOUR strategies that could be used to manage or mitigate this conflict to protect shareholders.      (4 marks)

 

QUESTION 6

December 2022 Question One A

Ethical responsibilities arise not as a result of legal requirements but as a result of moral imperative for companies to operate in an ethical and fair manner.

In light of the above statement, summarise SIX elements of business ethics in management of companies.           (6 marks)

 

QUESTION 7

August 2022 Question Two B (i)

Distinguish between the following terms as used in finance:

(i)     “Agency cost” and “agency problem”.        (2 marks)

 

QUESTION 8

August 2022 Question Three B

Discuss three causes of conflict between shareholders and managers in relation to agency theory.      (6 marks)

 

QUESTION 9

April 2022 Question One A

Describe four ways of encouraging managers to achieve stakeholders’ objectives. (4 marks)

QUESTION 10

December 2021 Question One A

Describe four possible sources of conflict of interest between shareholders and bondholders.           (4 marks)

QUESTION 11

September 2021 Question One B

Highlight four advantages of the wealth maximisation objective of a firm.     (4 marks)

QUESTION 12

November 2019 Question One A

In the context of agency theory:

(i) Explain the “principal-agent” problem.     (2 marks)

(ii) Explore two ways of addressing the principal-agent problem.     (4 marks