QF5213 Financial Management
The Complete Exam Bible · Sem 1 AY26/27QF5213 Overview
- National University of Singapore
- Semester 1, AY2026/27
- Postgraduate
- 4 Units
- Saturday morning classes
What the course sets out to do
The course outline describes QF5213 Financial Management as an introductory course meant to give a strong conceptual foundation in finance.
- Two tests carry 80% The Midterm Test and the Final Test are worth 40% each, and both are open book multiple choice papers of two hours.
- Speed comes from set-up Open book removes recall pressure, so marks depend on placing cash flows on a timeline and keying them correctly.
- One idea under every chapter A project, a share and a bond are all valued as the present value of the cash flows they produce.
- Bring a financial calculator The outline recommends one, and the worked examples here are written as calculator inputs.
How QF5213 is assessed
| Component | Weight | Format |
|---|---|---|
| Group Assignments | 20% | Fixed groups formed by the second week; three assignments due 31 August, 28 September and 19 October; submitted through Canvas, late work not accepted |
| Midterm Test | 40% | Saturday 17 October, Week 9: multiple choice, 2 hours, open book, all topics up to and including Bonds |
| Final Test | 40% | Saturday 14 November, Week 13: multiple choice, 2 hours, open book, all topics |
The three published weights total 100%. The course outline lists both tests on Examplify; two later Canvas announcements state that the weights on the midterm and final are unchanged, then move towards pen and paper tests, open book with hard copies only and a financial calculator rather than Excel, and put the choice to a class vote. Check the latest Canvas announcement for the format that was adopted. The outline sets out the make-up test policy, which grants make-up tests only for medical emergencies with documentation or for state-mandated and university sanctioned activities notified several weeks ahead.
Current QF5213 dates
| Date | Item | Control |
|---|---|---|
| 31 August 2026 | Assignment 1 due | Introduction and time value of money; Monday, by midnight. |
| 28 September 2026 | Assignment 2 due | Capital budgeting, stocks and bonds; Monday. |
| 17 October 2026 | Midterm Test | Week 9, Saturday. All topics up to and including Bonds. |
| 19 October 2026 | Assignment 3 due | Monday, as listed in the weekly schedule. |
| 14 November 2026 | Final Test | Week 13, Saturday. All topics. |
Dates are as published in the course outline and Canvas syllabus published for this offering. Confirm exact deadlines and submission settings in the live LMS.
What QF5213 covers
Nine chapters follow the Saturday classes in order, from the goal of the firm and the time value of money, through capital budgeting and real options, to the valuation of common stocks and bonds.
Shareholder Value and the Agency Problem
The goal of financial management, shareholder value, and the agency conflict between owners and managersWhy a corporation needs a theory of control
Week 1 of Financial Management sets the frame for everything that follows.
- The three questions of corporate finance
- Corporations, partnerships and sole proprietorships compared
- Separation of ownership and control
- Agency costs and the three remedies
- Debt and equity as contingent claims
- Why sales, cost and profit targets misfire
Present Value, Future Value and Compounding
Timelines, future and present value of single sums and uneven cash flows, and compounding within the yearWhy a dollar has a date attached
Finance treats an amount of money as incomplete until you know when it arrives.
- Three reasons money today outranks the same money later
- Drawing a timeline with end-of-period dates and signed cash flows
- Simple interest against compound interest, year by year
- Future value and present value of a single sum
- Valuing an uneven stream of cash flows on one common date
- Semiannual, monthly, daily and continuous compounding
Annuities and Effective Annual Rates
Ordinary and monthly annuities, loan payments and savings plans, and converting an APR into an effective rateFrom one cash flow to a repeating stream
Once a single sum can be moved backwards and forwards in time, the next question is what happens when the same amount repeats.
- Ordinary annuities and annuities due: present and future value
- Perpetuities, deferred perpetuities and growing annuities
- Monthly annuities for mortgages, car loans and savings plans
- Annual percentage rate versus effective annual rate
- Converting rates when payment and compounding frequencies differ
- Reducing balance, flat rate and annual rest loan quotes
NPV, IRR and Payback Appraisal Techniques
Payback, discounted payback, net present value and internal rate of return as capital budgeting decision rulesThree questions every appraisal method answers
Capital budgeting asks one thing of a manager: will this investment leave shareholders richer than the next best use of their money?
- The valuation steps that sit under every appraisal method
- Payback and discounted payback, and the cash flows they ignore
- Net present value as the dollar measure of value created
- Internal rate of return and when it agrees with NPV
- NPV profiles, crossover rates and multiple IRRs
- Profitability index under rationing, and projects with unequal lives
Relevant Incremental Cash Flows
Incremental cash flows, sunk and opportunity costs, side effects, working capital and the depreciation tax shieldWhy a project is judged on cash, not on profit
Once you know how to compute NPV and IRR, the harder question is what to feed into them. The answer is narrower than most first attempts assume.
- Why appraisal uses cash timing instead of accounting profit
- The with-and-without test for incremental cash flows
- Sunk costs, opportunity costs and allocated overhead
- Erosion and complementary sales as side effects
- Why interest is left out when discounting at WACC
- Net working capital invested at launch and recovered at the end
Sensitivity and Break-Even Project Analysis
Sensitivity and scenario analysis of a project NPV and the break-even level of salesWhy a single NPV is not the end of the analysis
A discounted cash flow model turns one set of forecasts into one number.
- Why one NPV hides forecasting risk
- Running a one-variable-at-a-time sensitivity test
- Measuring NPV response per 1% change in an input
- Building consistent multi-variable scenarios
- Accounting break-even from fixed cost and depreciation
- Financial break-even using equivalent annual cost
Decision Trees and Real Options
Solving a decision tree backwards and valuing the options to expand, abandon or waitWhy a single NPV can undersell a project
Ordinary discounted cash flow analysis quietly assumes that management commits on day one and then watches.
- Decision and chance nodes in a decision tree
- Solving a tree backward from the final payoffs
- The option to delay and choosing a launch date
- The option to abandon and salvage values
- Abandonment thresholds in units of sales
- The option to expand a successful project
Common Stock Valuation Methods
Dividend discount models with zero, constant and changing growth, market multiples and takeover premiumsThree ways to put a number on a share
Valuing common stock is harder than valuing a bond because nothing is promised.
- Rights issues: ex-rights price and the value of a right
- Book value and net tangible assets per share
- Dividend discount model: zero and constant growth
- Required return from the CAPM and why prices change
- Two-stage valuation with a terminal price
- Market multiples: P/E, P/B, P/S and EV/EBITDA
Bond Pricing, Coupons and Yields
Coupons, par and maturity, pricing a bond as a present value, premium and discount bonds and yield to maturityWhat a bond actually promises
Every bond in this topic reduces to a short list of promised payments. The issuer borrows money and agrees to send a fixed coupon at regular intervals plus the face value, usually $1,000, when the bond matures.
- Bond terminology: par value, coupon rate, periodic coupon and maturity
- Pricing a bond as the present value of coupons plus par
- Premium, discount and par bonds and their drift towards par over time
- Yield to maturity, current yield and their ordering
- Semiannual coupons, effective annual rate and yield to call
- Price risk, reinvestment risk and credit ratings
It has two stated objectives: to build the vocabulary and understanding needed to work with financial managers and market participants, and to use finance theory to solve the practical problems those managers face.
The Canvas syllabus adds that the course is aimed at quantitative and mathematical students and links their mathematical knowledge to industrial practice through case studies and selected models.
How the Saturday classes build
The first class sets the goal of financial management as maximising the value of the shareholders' stake and introduces the agency problem that arises when managers, not owners, take the decisions.
The second class is the toolkit for everything that follows: present and future value, different compounding periods, annuities and effective rates.
The third and fourth classes apply that toolkit to capital budgeting, first through the appraisal techniques of payback, net present value and internal rate of return, then through the relevant cash flows of a project, project analysis by sensitivity and break-even, and decision trees with real options.
The fifth and sixth classes value securities: common stocks by discounted dividends and market multiples, and bonds as the present value of coupons and principal.
Case readings on takeover offers and on an airline raising capital tie the valuation methods to real Singapore deals.
After the recess the schedule moves on to financial statement analysis, mergers and acquisitions, capital structure and dividend policy, which are examined in the Final Test.
What a strong answer looks like
Both tests are multiple choice and open book.
That format rewards a student who can turn a paragraph of facts into the right inputs quickly: which cash flows are relevant, when they arrive, which rate applies per period, and which decision rule settles the choice.
The distractors in a finance option set are almost always the result of one predictable slip, such as compounding where discounting is needed, mixing a monthly count of periods with an annual rate, or letting a payback cut-off overrule a positive NPV.
This guide is organised so that each chapter names those slips beside the method that avoids them.
QF5213 cheatsheet for the final exam
AskSia publishes a free QF5213 cheatsheet for the final exam, a cheat sheet that follows the official permitted-materials rule for this assessment and condenses the topics in this guide.
Worked example · free
Appraising a four-year project with NPV, IRR and payback
- 2Value the four equal savings as an ordinary annuity at 9%.
- 2Subtract the outlay to obtain the NPV and state the decision.
- 2Find the IRR and the payback period and check that they agree with the NPV verdict.
Key terms
- Present Value
- The value today of a cash flow received in the future, found by discounting it at the required rate of return.
- Effective Annual Rate
- The rate actually earned or paid over a year once compounding within the year is taken into account.
- Annuity
- A stream of equal cash flows paid at regular intervals for a fixed number of periods.
- Net Present Value
- The present value of a project's future cash flows minus its initial cost; a positive figure means the project adds value.
- Internal Rate of Return
- The discount rate that sets a project's net present value to zero, compared against the cost of capital to decide.
- Agency Problem
- The conflict that arises when managers acting for shareholders pursue goals of their own instead of shareholder value.
- Real Option
- A right, without obligation, to change a project later, such as expanding, abandoning or delaying it.
- Yield to Maturity
- The single discount rate that equates a bond's price to the present value of its coupons and principal.
- Dividend Growth Model
- A share valuation that discounts dividends expected to grow at a constant rate forever, giving next dividend over r minus g.
QF5213 FAQ
How is Financial Management at NUS graded this semester?
The course outline gives three components: Group Assignments worth 20%, a Midterm Test worth 40% and a Final Test worth 40%. Both tests are two hour, open book, multiple choice papers. The midterm covers everything up to and including Bonds, while the final covers all topics, including those taught after the recess.
Will the tests be on Examplify or on paper?
The outline lists Examplify, but two later Canvas announcements moved towards pen and paper with hard copies only and a financial calculator, and put the choice to a class vote while confirming the weights were unchanged. Read the most recent announcement on Canvas to see which format was adopted before you prepare.
Do I really need a financial calculator?
The outline recommends a financial calculator and names the HP 10BII Plus as user friendly, and the schedule mentions videos for both HP and TI models. If the tests run on paper without Excel, the calculator becomes the only fast way to solve annuity, NPV and yield problems.
Which topics should I prioritise for the midterm?
The midterm scope ends at Bonds, so it spans the goal of the firm, the time value of money, all of capital budgeting including real options, and stock and bond valuation. Time value methods feed every later topic, so weakness there costs marks in every chapter.
Why does the course keep coming back to present value?
Every valuation the course teaches, of a project, a share or a bond, is the sum of discounted future cash flows. Once you can place cash flows on a timeline and discount them correctly, capital budgeting, the dividend discount model and bond pricing become the same calculation with different inputs.
How are the group assignments organised?
Groups are formed by the second week and stay fixed until the end of the semester. Assignments are submitted through Canvas with a group cover page, and the outline states plainly that late submissions will not be accepted, so plan internal deadlines before each due date.
Questions students ask in each QF5213 chapter
- What is the principal-agent problem between shareholders and managers?
- Shareholders are the principals who supply capital; managers are agents hired to run the business for them. Because managers usually hold only a small stake, they can enjoy perks, protect their jobs or grow the firm for status while owners bear most of the cost. That divergence of interests is the agency problem. Chapter 01 · Shareholder Value and the Agency Problem
- What is the difference between present value and future value?
- Present value states what a later amount is worth at time 0, while future value states what an amount held now will grow to at a chosen later date. They are the same relationship read in opposite directions: compounding multiplies by one plus the rate raised to the number of periods, and discounting divides by that factor. Chapter 02 · Present Value, Future Value and Compounding
- How do I tell whether a question describes an ordinary annuity or an annuity due?
- Look for when the first payment happens. Phrases such as starting immediately, today, or at the beginning of each month signal an annuity due, while end of the month, starting next year, or salary style payments signal an ordinary annuity. Draw the timeline first and place the first arrow before choosing a formula. Chapter 03 · Annuities and Effective Annual Rates
- What is the difference between payback and discounted payback?
- Simple payback adds raw cash flows until the outlay is recovered, so a dollar in year three counts the same as a dollar today. Discounted payback first converts each cash flow to present value at the cost of capital, which makes the recovery take longer. Neither method looks at cash arriving after the cutoff. Chapter 04 · NPV, IRR and Payback Appraisal Techniques
- Should sunk costs be included in NPV?
- No. A cost already paid, such as last year's research or a consultant's report on the project, is the same whether the firm accepts or rejects. Adding it makes good projects look bad and can lead you to reject an investment that would recover part of an unavoidable loss. Chapter 05 · Relevant Incremental Cash Flows
- Why is financial break-even always higher than accounting break-even?
- Accounting break-even recovers the investment only through depreciation, which returns the original dollars with no reward for waiting. Financial break-even replaces depreciation with an equivalent annual cost that includes the required return, so more units must be sold each year to cover that extra charge whenever the discount rate is positive. Chapter 06 · Sensitivity and Break-Even Project Analysis
- How do you solve a decision tree in capital budgeting?
- Start at the right-hand end and value each final branch at the date its cash flows begin. At every choice square keep the best branch, at every chance circle take the probability weighted average, then discount back one period at a time until you reach year 0 and subtract any first-stage cost. Chapter 07 · Decision Trees and Real Options
- Why can the constant growth formula not be used when growth exceeds the required return?
- The denominator, required return minus growth, would be zero or negative, producing an infinite or negative price that has no economic meaning. Very high growth can only last a few years because competitors enter and markets saturate, so value those years separately and switch to the formula once growth falls below the discount rate. Chapter 08 · Common Stock Valuation Methods
- How do you know if a bond trades at a premium or a discount?
- Compare the coupon rate with the yield investors currently demand. If the coupon pays more than that yield, buyers bid the price above face value; if it pays less, the price drops below face value. When the two rates match the bond sells at exactly face value. Chapter 09 · Bond Pricing, Coupons and Yields
How to study for the exam
Work every chapter's example twice: once reading along, and once a day later from a blank page with only the calculator. Keep a single sheet that maps question wording to the method it calls for, such as equal payments to an annuity or below par to a coupon under the yield, and bring it to both tests.
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