DSST Principles of Finance study guide
DSST Principles of Finance · Work through your exam, one topic at a time.
Principles of Finance is one of the business titles in the DSST credit-by-examination catalog, listed by the program as a 3-credit baccalaureate exam. It is aimed at students who already handle introductory finance material and want college credit for it rather than seat time, including undergraduates filling a business requirement, adults returning to school, and service members using DSST testing to move faster toward a degree. The DSST Principles of Finance study guide has 7 sections and about 2,629 words.
01Financial Statements and Planning
The exam tests whether you can read the three statements, convert them into ratios, and build a simple pro forma forecast that identifies external financing need (EFN). Balance sheet: Assets = Liabilities + Equity.
406 words, about 2 min02Time Value of Money
The exam tests single-sum compounding and discounting, annuities, perpetuities, rate conversion, and loan amortization. Nearly every later topic-valuation, capital budgeting, cost of capital-depends on these mechanics.
372 words, about 2 min03Working Capital Management
The exam tests the cash conversion cycle, liquidity measurement, credit policy, inventory control, and the true cost of short-term financing sources. Net working capital = current assets − current liabilities.
373 words, about 2 min04Valuation and Characteristics
The exam tests pricing bonds, preferred stock, and common stock, and understanding the features that shift required returns. Price = PV of coupon payments + PV of par value, discounted at the yield to maturity.
384 words, about 2 min05Capital Budgeting
The exam tests estimating incremental project cash flows and applying the decision rules: NPV, IRR, payback, discounted payback, and profitability index. Relevant cash flows are incremental, after-tax, and actual cash-never accounting income.
347 words, about 2 min06Cost of Capital
The exam tests computing each component cost and combining them into the weighted average cost of capital (WACC), plus choosing appropriate weights and discount rates. Debt: after-tax cost = YTM × (1 − T).
373 words, about 2 min07Risk and Return
The exam tests measuring expected return and risk, the mechanics of diversification, beta, the CAPM, and risk-adjusted performance evaluation. Expected return = Σ p i r i, the probability-weighted average of outcomes.
374 words, about 2 min