How to answer theory questions?

BEFORE you start writing on your answer sheet, you need to FIRSTLY construct an ANSWER PLAN that addressses the EXACT QUESTION(S) that have been set by the Examiner within the REQUIREMNTS PART of the question.

When learning THEORY within the F9 syllabus I usually attempt to summarise the topic under some or all of the following HEADINGS:
(1) Definition
(2) State Formula associated with the particular Theory/Model or outline appropriate TEMPLATE
(3) State ASSUMPTIONS of the Model/Theory
(4) Describe main ADVANTAGES of the particular THEORY
(5) Describe main DISADVANTAGES of the particular Theory
(6) Offer a simple EXAMPLE of how you would use the FORMULA, MODEL or Theory
(7) Suggest any EMPIRICAL EVIDENCE to support the Model/Theory
(8) Conclusion – usually a particular THEORY is limited by the ASSUMPTIONS which underly it.

My ANSWER PLAN will then utilise SOME or all of these headings to construct my final answer in the exam.

ALWAYS watch the number of sub-headings used MATCH the number of marks available for the Question PART …. for example, 5 marks might = 5 points = 5 sub headings.

Hope you find this helpful, Kevin Kelly

As a general rule, I advise to do the calculation parts FIRSTLY…but you MUST be brutal with your time management here. Get your layout (template) down as quickly as possible and then just perform the calculations as far as you can go … and then STOP what you are doing! REMEMBER, most “smart” students will not finish their calculations to the bitter end!!.

When your time allocation is up you MUST STOP what you are doing and move immediately onto the THEORY part. Often, the theory question will follow-on from, or be based on, your calculations completed in earlier parts. Here now you have an opportunity to make up for the feeling that you have not done as well as you would have liked to on the calculations. If the question says 5 marks, then make sure you have made 5 good lucid and relevant points.

You need to remember that it is here that students too often under-perform and fail the exam. They pay scant attention to the theory part after having over-ran or spent too much time fixated on trying to produce correct numbers or finish a particular series of calculations ….. this is really foolish from an EXAM TECHNIQUE point of view.

Remember, your strategy for passing the exam must be built around following the marks and picking up marks wherever you can… A masterpiece of calculations, at the expense of time spent on theory will NOT help you pass the exam.

Practice this before the big day! Hope this helps you in your preparations. Good luck, Kevin Kelly

I recommend that you try as far as possible to construct an ANSWER PLAN from ONLY reading each part of the Question REQUIREMENTS. That is, you MUST try and IGNORE the text or narrative or calculations that precede the requirements section of each question.

In this way you will remain completely FOCUSED on sketching an ANSWER PLAN which is tailored to match the marks available for that particular Question Part.

For example, what is meant by foreign exchange risk (3 marks)? …. Your answer plan will require 3 headings, lets say Transaction Exp, Translation Exp, and Economic Exp …… a couple of lines under each heading and that’s all the time you have and then STOP what you are doing and move on to the next question part. This is how to do the answer plan – BEFORE writing your actual answer you read the question narrative in order to make sure your initial answer plan covers everything that is required by the question within the time allowed, making sure you haven’t missed or misunderstood anything.

The same question could have said … what is meant by foreign exchange risk (7 marks)? …. In this case you will need 7 points or suitable headings. For example, like before your answer plan will require 3 headings, lets say Transaction Exp, Translation Exp, and Economic Exp …… but you will also need to discuss suitable hedging techniques for each exposure. For example, especially list the INTERNAL and EXTERNAL hedging techniques under transactions exposure. Balance your answer with a brief mention of hedging strategies under translation and economic exposures. ……. you MUST be careful not to write too much on one aspect at the expense of another aspect. What your answer plan should achieve is a BALANCED answer utilising ONLY the number of points or headings required by your Answer Plan. … the important point is to stick to your answer plan headings and/or points

I hope you get the idea, Regards, Kevin Kelly