Principles of Finance, my Experience

[chizad]

On the 06/27/06 I took the Principles of finance test and passed w/ a 62 (46 is passing)! I probably over studied because people freaked me out when they told me the pass rate is so low. but anyways, i passed, and i am happy.

I took the computerized version of this test and I want to make more verifications regarding the computerized version to date and give you some tips i used to study.

When I went to take the test, I had to pay $20 to the testing center to proctor the exam (pretty standard stuff they do). the dsst exam is $70. The only way you can pay for the exam is by credit card over the computer. One important note, insure you have more than one credit card in case you have problems getting one of them to work, as was my case, and it wasnt even because i had a negative balance!

WARNING!! Although they provide tables for PV and FV on the paper exam, they don't on the computerized exam, Even though i called them and they told me they would be provided on the computer screen. Therefore you only have two methods of calculating these problems (and they give you a lot of problems). One is to memorize the PV and FV for $1 and for anuities (YUCK!), or you can buy yourself a nice convenient financial calulator, i did the second. Be sure to become very familiar w/ your calculator and know how to use it before u go to the exam.

My test had 88 questions and i had 2 hours to complete the exam. I finished the exam with 32 minutes remaining, which amazed me! During the exam you are allowed to back to previous questions and they were nice enough to allow you to mark questions you want to return to at the end of the test. When you do get to the end, it will show you all the questions you answered and you can go back to any needed.

Things covered different types of ratios (memorize all the types of ratios!) you should know which ones are profitability, asset utilization, etc.

There will be many questions on PV, FV, and PV & FV of anuities. you should practice all types of questions regarding these, and in many instances you had to use more than one value to determine the answer.

I had a couple questions on EOQ, you should memorize the formula and know how to calulate it.

You must know all how to calculate future cash flows using all three methods (payback method, NPV, IRR)

there were questions and problems on financial leverage, operating leverage, and combined leverage.

I had a couple questions on credit terms (i.e 2/10 net 30).. those are easy questions don't miss out on those!

I had a question on calculating foreign currencies. while i studied and knew how to work these problems, the question was weird and i probably got it wrong.

know that common stock is the most expensive investment!

know what beta is and how to calculate CAPM

you need to know the steps to go through for determining net income on an income state as they will just give you parts of an financial statement and require you to calculate from it.


To study for the test, I used the following book exclusively:

Foundations of Financial Management 11
by Block, Stanley B. / Hirt, Geoffrey A. -
McGraw Hill, 2005,
ISBN 9780072977929

While many subjects were not covered that were in the book, I read every chapter. and it helped, it appeared that i didtn have any questions regarding the median values or derivitives, but good stuff to know anyways! Good luck to everyone!

[Kiwi Lover]

chizad,

CONGRATULATIONS on passing a difficult test - you did well! And thanks very much for posting such good feedback, which I will copy and paste into the Specific Exam Feedback section.

JoAnne

[mstcrow5429]

Are you absolutely certain there are no FV or PV tables on the computer exam (like not hiding behind a menu or something)? Have others found this to be the case? If they're not present, this would be helpful as another reason that the 4-function calculator rule cannot be true, and I could present this as additional evidence to my local DSST testing facility. Thanks.