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Principles of Finance DSST
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Free Principles of Finance DSST Study Guide

Name of Exam: Principles of Finance DSST

Number of Questions: Around 98 (varies)

Time Limit: 120 Minutes

ACE Recommended Passing Score: 400

Practice Test Available?: Yes - See McGraw-Hill in Free Resources

Cost: $80 + Sitting Fee (Usually no more than $20) at your testing site. Military can take DSSTs for free with Tuition Assistance. Check with your Educational Officer!

Difficulty 1-5 : 5
(One being the easiest, and five being the hardest)

Exam Description:

The Principles of Finance DSST covers what a student would learn during a single semester of a college Finance class.

Specific topics covered include Hedge Funds, Future Value and Present Value, Bonds and Common Stock, Cost of Debt and Equity.

Personal Thoughts:

This is another beast of an exam from all accounts. I haven't taken it myself, so I'm only going off of third party reviews. From what I've read, this one needs to be approached with some prior knowledge. Almost every review of the exam I'm found suggests you take an Accounting class well before attempting the Principles of Finance DSST.

That being said, I'd take a look at the Financial Accounting CLEP if you don't have an accounting background already. Much of the knowledge you'll learn there is covered in this exam as well.

Edit: I've since changed this to a difficulty level of "5" after multiple people wrote in. I've had accounting majors and people taking Calculus III all telling me that this one is beyond difficult, especially with the time limit and the provided in-test calculator. Not trying to scare people, but just wanted you to know the reason behind the change.

Exam breakdown:

Make sure you check out the Official DSST Fact Sheet for this exam.

Pay attention to the bottom of the fact sheet. It contains some sample questions that closely mimic the type of scenario-based questions you'll see on the actual exam.

The Principles of Finance DSST is broken down as follows:

20% Time Value of Money
20% Financial Statements and Planning
12% Capital Budgeting
11% Cost of Capital
11% Risk and Return
10% Working Capital Management
09% Valuation and Characteristics
07% International Financial Management

Areas of Study

I'm going to list some specific topics that you'll need to study.

Though there are different versions of the Principles of Finance DSST, you'll most likely see some of the following on your exam:

  • Taxes
  • Cost of Capital
  • Hedging
  • Present Value
  • Future Value
  • Cost of Equity
  • Impact of Exchange Rates
  • IFM
  • Bonds
  • Balance Sheets
  • Break even analysis and sensitivity
  • Cash Budgets
  • Capital Asset Pricing Model
  • Common Stocks
  • Rate of Return
  • Diversification

This is not a comprehensive list of topics! I highly recommend (as always) signing up for InstantCert and running through their entire flashcard series as well as seeing the Specific Feedback section for this exam. They've had years to accumulate their information, and it shows.

Recommended Free Study Resources

  • Accounting - Tons of good information on here as noted on the Financial Accounting CLEP. I'd open this site in one window, and the Official Fact Sheet in the other. Go down the latter and anything you don't understand then look it up on the Accounting Coach site.
  • - I really like this site. I'd use it the same way as the Accounting Coach website, and use the Fact Sheet to target what you need to go over. The nice thing about this site is the Youtube videos that goes along with each lesson.
  • Capital Budgeting Lecture - Here's a list of videos on Youtube that cover virtually everything on Finance. If you can't find a video lecture on a particular item on the Fact Sheet at the TeacherFinance site, then look here.
  • An-Najah Video - Yet another video lecture series on the entire Finance subject. The lectures are in English though the accent can be a bit heavy at times. Still, it's the single best full-subject lecture series I've found for the Principles of Finance DSST.
  • McGraw-Hill Corporate Finance Online - First, it has quite a few lessons that are pretty nice. If you click on the Finance Tutor Series box on the left side of the screen, it opens up to practice tests on specific subjects.
  • Snazzlefrag's Principles of Finance Study Guide - As always, a great resource to refresh after doing the initial study. Go through the other resources first, and then use this to really hammer home the material.

Recommended bargain-priced study resources

Always check your library first! You may be able to find some of these for free. You don't have to buy the officially recommended resources all the time. If you're the type of person that prefers to study from a textbook source however, then please see below.

Finance (Barron's Business Review Series) - By all accounts a great book for this exam. Probably one of the more cost-effective ways of studying, though I'd back it up with IC's flashcards at the very least.

Standard Deviants: Finance, Vol. 1 - You can pick up all three lessons for under $60, though I'd still check your library first since these are often stocked.

InstantCert Academy Principles of Finance Specific Exam Feedback - Four pages of targeted information for this exam. Take a look at the last few posts for the updated exam material, though don't ignore the preceding pages. Also if you've subscribed, make sure you go through the Flashcards for Principles of Finance as well.

If you don't know what InstantCert is, then click here for the scoop as well as a discount code: **InstantCert Academy**

You'll find an InstantCert link for every exam here if that gives you an idea of the amount of information they have available. It's an outstanding resource.

Closing Thoughts

Since Finance is a requirement for most business degrees, it's primarily those students to whom I would recommend this exam. If accounting is what you do for fun, then you're probably safe on this one as well. Anybody else out there who is just looking for Upper Level exams, I would recommend going elsewhere. There are easier DSST's (and even ECE's) that will give you the same amount of credit with less work.

Best of luck!

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