$5one-time
- 38-page printable PDF
- 183 terms with examples
- 46 practice questions, answers explained
- 2-page cram sheet and study plans
← DSST Principles of Finance course
DSST® Study Guide
Printable PDF · 38 pages
DSST Principles of Finance Study Guide
Everything the DSST Principles of Finance exam tests, in one PDF you can print. Built from Prometric's official outline, heaviest topics first.
- 183 key terms, each with an example
- 46 practice questions with every answer explained
- A 2-page cram sheet for the night before
- 2-, 4- and 8-week study plans built from the exam weights
Last updated 2026 · exam details checked against Prometric's published exam information in 2026
Look inside the guide
Real pages from the 38-page PDF.
What you get for $5
One chapter for each official content area, in the order the exam weighs them.
- 📘38pages, printable
- 🧭8chapters, heaviest first
- 🔑183terms with examples
- ✍️46practice questions, answers explained
- ⚠️23exam traps to avoid
- 📄2page cram sheet
Try 10 free Principles of Finance questions
In the style of the real exam, from all 8 areas. About 10 minutes, with every answer explained and a score by area.
10 questions
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Question 1 · Financial Statements and Planning
A firm borrows $40,000 from its bank and deposits the cash. What is the effect on its balance sheet?
Show the answer
Answer: C. Assets and liabilities each rise by $40,000; owners' equity is unchanged. The cash received raises assets, and the loan raises liabilities by the same amount. Owners' equity is untouched because no profit was earned.
The trap: Assets and owners' equity each rising treats the loan as income. A loan is a debt, so it adds to liabilities, not equity.
The cash received raises assets, and the loan raises liabilities by the same amount. Owners' equity is untouched because no profit was earned.
The trap: Assets and owners' equity each rising treats the loan as income. A loan is a debt, so it adds to liabilities, not equity.
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Question 2 · Time Value of Money
An ordinary annuity of equal yearly payments has a present value of $3,000 at an 8% discount rate. What is the present value of an otherwise identical annuity due?
Show the answer
Answer: A. $3,240. Each payment of an annuity due arrives one period earlier, so its value is the ordinary annuity value times (1 + 0.08): 3,000 × 1.08 = $3,240.
The trap: The $2,778 choice divides by 1.08, which moves the value the wrong way. Earlier payments are worth more, not less.
Each payment of an annuity due arrives one period earlier, so its value is the ordinary annuity value times (1 + 0.08): 3,000 × 1.08 = $3,240.
The trap: The $2,778 choice divides by 1.08, which moves the value the wrong way. Earlier payments are worth more, not less.
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Question 3 · Capital Budgeting
A project costs $140,000 today and is expected to return $50,000, $60,000 and $70,000 at the ends of years 1, 2 and 3. At a 10% required return, its NPV is closest to (round to the nearest dollar)
Show the answer
Answer: D. $7,633. Present values: $50,000/1.10 = $45,454.55; $60,000/1.10^2 = $49,586.78; $70,000/1.10^3 = $52,592.04. They total about $147,633. Subtracting the $140,000 cost gives $7,633.
The trap: $40,000 adds the cash flows without discounting ($180,000 - $140,000). That ignores the time value of money.
Present values: $50,000/1.10 = $45,454.55; $60,000/1.10^2 = $49,586.78; $70,000/1.10^3 = $52,592.04. They total about $147,633. Subtracting the $140,000 cost gives $7,633.
The trap: $40,000 adds the cash flows without discounting ($180,000 - $140,000). That ignores the time value of money.
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Question 4 · Risk and Return
An investor puts $7,000 in stock A with an expected return of 12% and $3,000 in stock B with an expected return of 6%. What is the expected return of the portfolio?
Show the answer
Answer: B. 10.2%. The weights are 70% and 30%, so the expected return is 0.7 × 12% + 0.3 × 6% = 8.4% + 1.8% = 10.2%.
The trap: The 9.0% choice is the simple average of 12% and 6%. It ignores that most of the money is in the higher-return stock.
The weights are 70% and 30%, so the expected return is 0.7 × 12% + 0.3 × 6% = 8.4% + 1.8% = 10.2%.
The trap: The 9.0% choice is the simple average of 12% and 6%. It ignores that most of the money is in the higher-return stock.
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Question 5 · Cost of Capital
A firm can sell new bonds that yield 8%. Its tax rate is 25%. Its after-tax cost of debt is
Show the answer
Answer: A. 6.0%. Interest is tax deductible, so the cost is 8% x (1 - 0.25) = 6.0%.
The trap: 8.0% is the before-tax cost. The tax saving on interest must be removed before debt enters the capital cost.
Interest is tax deductible, so the cost is 8% x (1 - 0.25) = 6.0%.
The trap: 8.0% is the before-tax cost. The tax saving on interest must be removed before debt enters the capital cost.
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Question 6 · Working Capital Management
A firm receives a $20,000 invoice dated June 1 with terms of 2/10 net 30. How much should the firm pay if it pays on June 9?
Show the answer
Answer: B. $19,600. Paying within 10 days earns the 2% discount: 20,000 × 0.98 = $19,600.
The trap: The $20,000 choice is the full invoice, due only if the firm pays after the discount period ends. Day 9 is inside the 10-day window.
Paying within 10 days earns the 2% discount: 20,000 × 0.98 = $19,600.
The trap: The $20,000 choice is the full invoice, due only if the firm pays after the discount period ends. Day 9 is inside the 10-day window.
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Question 7 · Valuation and Characteristics of Stocks and Bonds
A bond has a 5% coupon rate, and similar bonds now offer a 7% yield to investors. At what price should this bond sell?
Show the answer
Answer: C. Below its par value. The bond pays less than the market demands, so its price must fall below par until its yield rises to 7%.
The trap: The at-par choice only holds when the coupon rate equals the market yield. Here the coupon is lower than the yield.
The bond pays less than the market demands, so its price must fall below par until its yield rises to 7%.
The trap: The at-par choice only holds when the coupon rate equals the market yield. Here the coupon is lower than the yield.
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Question 8 · International Financial Management
A U.S. retailer buys goods from a British supplier and pays in pounds. The pound falls from $1.30 to $1.20. For the retailer, this change
Show the answer
Answer: D. lowers the dollar cost of the goods, because the pound has depreciated. A pound that costs fewer dollars has depreciated. The same pound price now takes fewer dollars to pay, so the goods cost the retailer less.
The trap: Saying the cost rises mixes up the direction. A cheaper pound means each pound of the bill costs fewer dollars.
A pound that costs fewer dollars has depreciated. The same pound price now takes fewer dollars to pay, so the goods cost the retailer less.
The trap: Saying the cost rises mixes up the direction. A cheaper pound means each pound of the bill costs fewer dollars.
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Question 9 · Financial Statements and Planning
A firm has current assets of $120,000, of which $45,000 is inventory, and current liabilities of $60,000. What is its quick ratio?
Show the answer
Answer: B. 1.25. Remove inventory from current assets: $120,000 - $45,000 = $75,000. Divide by current liabilities: $75,000 / $60,000 = 1.25.
The trap: 2.00 is the current ratio, which leaves inventory in. The quick ratio takes it out.
Remove inventory from current assets: $120,000 - $45,000 = $75,000. Divide by current liabilities: $75,000 / $60,000 = 1.25.
The trap: 2.00 is the current ratio, which leaves inventory in. The quick ratio takes it out.
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Question 10 · Time Value of Money
A trust is promised $250 at the end of every year forever. If the appropriate discount rate is 5%, what is the present value of this stream?
Show the answer
Answer: D. $5,000. A perpetuity's present value is the payment divided by the rate: 250 ÷ 0.05 = $5,000.
The trap: The $12.50 choice multiplies the payment by the rate, which finds the interest on $250 instead of the value of the stream.
A perpetuity's present value is the payment divided by the rate: 250 ÷ 0.05 = $5,000.
The trap: The $12.50 choice multiplies the payment by the rate, which finds the interest on $250 instead of the value of the stream.
The DSST Principles of Finance exam at a glance
The DSST Principles of Finance exam is a 120-minute, computer-based test from Prometric with about 100 multiple-choice questions. A score of 400 on the 200–500 scale earns an ACE credit recommendation of 3 semester hours, though each college sets its own policy. The exam covers 8 content areas; the heaviest is Financial Statements and Planning at 20%.
- Questions
- About 100multiple choice
- Time
- 120 minabout 72 seconds a question
- Passing score
- 400on a 200–500 scale
- ACE credit
- 3semester hours
- Exam fee
- $100paid to Prometric
- Calculator
- Yesallowed on this exam
What the exam covers
8 areas, heaviest first. The guide's chapters follow this order.
- Financial Statements and Planning20%
- Time Value of Money20%
- Capital Budgeting12%
- Risk and Return12%
- Cost of Capital11%
- Working Capital Management10%
- Valuation and Characteristics of Stocks and Bonds8%
- International Financial Management7%
How it works
- 1Buy once, $5Secure checkout. No subscription needed.
- 2Download the PDFFrom your TransferCredit.org account, right away and any time later.
- 3Study the heaviest areas firstFollow the 2-, 4- or 8-week plan, then read the cram sheet the night before.
Questions students ask
What's in the full DSST Principles of Finance study guide?
38 pages: 8 chapters, one per official content area, heaviest first. 183 terms, each with a plain-English definition and an example, 7 key people, common traps and memory tricks, 46 practice questions with an answer key that explains every answer, question tactics, 2-, 4- and 8-week study plans and a 2-page cram sheet.
How much is the full DSST Principles of Finance study guide?
The full 38-page PDF is $5, a one-time payment. The 10 practice questions on this page are free, with no account.
What does the $29 plan include?
$29 a month gives you all DSST subjects: every DSST study guide plus the full prep course for each subject, and you can cancel anytime. If you only need this exam, the guide on its own is a one-time $5.
How do I get the full guide?
Choose Buy this guide ($5) and check out. Then sign in to your TransferCredit.org account, then open the course and its Download Your Study Guide lesson. The PDF is yours to keep, and you can download it again from your account at any time.
Can I print the guide or use it on my phone?
Yes. It's a PDF, so it opens on phones, tablets and computers, and printing is allowed. Its tick boxes and answer bubbles work in PDF readers that support forms. Copying and editing are turned off.
Is this an official DSST study guide?
No. DSST® is a registered trademark of Prometric, which was not involved in producing this guide and does not endorse it. TransferCredit.org is independent. We built the guide from the official exam outline, and the exam details were checked against Prometric's published exam information in 2026.
Why is this study guide better than a generic review?
It follows the official outline area by area and spends the most pages on what the exam weighs most. Every term comes with an example, each chapter names the traps the exam sets, and the answer key explains why the most tempting wrong answer is wrong, not just which answer is right. It ends with a 2-page cram sheet for the night before.
What is the DSST Principles of Finance exam?
The DSST Principles of Finance exam is a 120-minute, computer-based test from Prometric with about 100 multiple-choice questions. A score of 400 on the 200–500 scale earns an ACE credit recommendation of 3 semester hours, though each college sets its own policy. The exam covers 8 content areas; the heaviest is Financial Statements and Planning at 20%.
More questions about the DSST Principles of Finance exam (22)
How many questions are on the DSST Principles of Finance exam, and how long is it?
It contains 100 questions to be answered in 2 hours.
What is the passing score for DSST Principles of Finance?
The passing score is 400 on a 200–500 scale. At 400 or above, the American Council on Education (ACE) recommends 3 semester hours. Each college sets its own passing score and credit award, so check your school's policy before you book.
How much does the DSST Principles of Finance exam cost?
The exam fee is $100, paid to Prometric. Test centers may add their own administration fee. Eligible U.S. military service members can usually test for free through DANTES.
How many college credits is DSST Principles of Finance worth?
ACE recommends 3 semester hours for a passing score of 400. Your college decides how many credits it awards and which course they replace. Check your college's policy.
Can I use a calculator on the DSST Principles of Finance exam?
Yes. A calculator is allowed. Check the official exam page for the type provided.
Is there a penalty for guessing on DSST Principles of Finance?
No. Your score counts only correct answers, so a wrong answer costs nothing. Never leave a question blank: rule out what you can and pick your best guess.
What topics are on the DSST Principles of Finance exam?
8 content areas, from the official outline: Financial Statements and Planning (20%); Time Value of Money (20%); Capital Budgeting (12%); Risk and Return (12%); Cost of Capital (11%); Working Capital Management (10%); Valuation and Characteristics of Stocks and Bonds (8%); International Financial Management (7%).
Which DSST Principles of Finance topics should I study first?
Start with the three heaviest: Financial Statements and Planning (20%), Time Value of Money (20%) and Capital Budgeting (12%). Together they are about 52% of the exam, roughly 52 of 100 questions. The guide's chapters run in that order, heaviest first.
Is the DSST Principles of Finance exam hard?
It depends on what you already know. No single area dominates: the largest, Financial Statements and Planning, is 20% and the smallest, International Financial Management, is 7%, so broad coverage matters more than deep expertise in one topic. Take the free diagnostic above to see where you stand in about 10 minutes.
What kinds of questions are on the DSST Principles of Finance exam?
The guide sorts them into 5 types: “Compute the ratio”, “What changes on the statements?”, “Apply the decision rule”, “Which way does it move?” and “Pick the best terms”. Every question has 4 answer choices. Try the 10 free questions above to see the style.
How long should I study for DSST Principles of Finance?
Use the diagnostic to decide. If you already know most areas, two weeks of daily review is often enough; if the subject is new to you, plan on eight. The full guide has 2-, 4- and 8-week plans built from the exam weights.
How should I pace myself on the DSST Principles of Finance exam?
On average you have about 72 seconds per question (120 minutes for 100 questions). Be past question 33 a third of the way through and past question 67 two-thirds through. If a question takes more than a minute, pick your best guess, mark it and come back.
What happens if I don't pass DSST Principles of Finance?
You can retake a DSST exam after 30 days. Use the wait to work through the areas the score report and the diagnostic show you missed.
Do colleges accept DSST Principles of Finance for credit?
DSST exams are accepted at more than 1,500 colleges and universities, but each school decides which exams it accepts, the score it requires and the credit it gives. Look up your college's DSST policy before you book.
How is the guide different from the DSST Principles of Finance course?
The guide is a 38-page PDF for review and self-testing. The DSST Principles of Finance course is a full online course with lessons, quizzes and a practice exam, for $19 with lifetime access. Many students use the guide first, then take the course for the areas the diagnostic flags.
How up to date is this DSST Principles of Finance guide?
Last updated 2026. The exam details were checked against Prometric's published exam information in 2026. Exams change, so confirm the details on the official exam page before you register.
What should I do the night before the exam?
Read the cram sheet once, slowly. Check your test time, the location or remote-proctoring setup, and the ID you need. Then sleep: a rested brain recalls more than a crammed one. In the morning, skim the memory tricks and common traps, then stop studying.
Does DSST Principles of Finance cover international finance?
Yes, at 7% of the exam: how exchange rates affect international markets, currency and political risk, and tools such as spot versus forward contracts and hedging.
What's the difference between NPV and IRR on DSST Principles of Finance?
NPV is the present value of a project's cash flows minus its cost at the required return, and you accept a project when NPV is positive. IRR is the discount rate that makes NPV zero, and you accept when IRR exceeds the required return. Both are in Capital Budgeting (12%) with payback and ARR.
Which formulas should I know for DSST Principles of Finance?
Present and future value of lump sums and annuities, EAR and APR, NPV and IRR, bond pricing, the dividend discount model, CAPM, WACC and the main financial ratios.
Can I take DSST Principles of Finance online?
Yes. DSST exams can be taken at a test center or online with a remote Prometric proctor.
Is DSST Principles of Finance the same as DSST Personal Finance?
No. Principles of Finance is corporate finance: valuation, capital budgeting and the cost of capital. Personal Finance covers budgeting, credit, insurance, investing and retirement for individuals.
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DSST® is a registered trademark of Prometric, which was not involved in producing this guide and does not endorse it. TransferCredit.org is independent and not affiliated with Prometric. © 2026 UPI Globale Edu Inc.