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Dear Sir,
The question on exam technique.
Part (c) “Draft a brief report for presentation to the board of directors with a recommendation on …… and on the techniques that the board should consider when reviewing capital investment projects in future.”
The answer mentions only techniques that are either allready mentioned in the question (duration and DPB) or related to them (simulation relates to the mentioned sensitivity analysis).
My question is whether one should use such an approach (i.e. build the answer based on the previously mentioned techniques commenting thereon, although the question does not require this directly) or one can reffer to any technique such as MIRR which is not mentioned in the question.
Please clarify which approach is better in terms of getting marks?
Thank you in advance.
The main thing (apart obviously from making sure you get the professional marks by setting it out in the style of a report – for these marks the content itself is irrelevant) is to comment on the techniques relevant to the question. By all means mention other techniques that could prove useful, but only if they are relevant to the particular situation and provided (obviously) that you have time.
Keep you eye always on the marks allocated to the section.
If it is 5 marks then you are not expected to make many points. If it is 20 marks then you will be expected to make a lot more!
There is no fixed rule about points per mark (look at the marking schemes to see what I mean), but generally, aim to make 1 point per mark. (So if it is 5 marks then aim to make 5 points). Often, however, it is 2 marks per point!!!
It is almost impossible to think of enough points in the time available (I would not be able to in the middle of an exam), but always remember that the pass rate is 50%, and so if you can get half marks on every part of every question then you will pass – anything extra that you manage to do is (in a sense) a bonus mark.
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