The topics and the traps inside them
| Topic | The question | The trap |
|---|---|---|
| Time value of money | Find a payment, a balance, or a number of years | Rate and payment periods do not match |
| Bonds | Price a bond or find its yield | Semiannual coupons, and mixing coupon rate with yield |
| Stocks | Value a share with a growing dividend | Using last year's dividend instead of next year's |
| NPV, IRR, payback | Accept or reject, or choose between projects | Sign errors and discounting the initial cost |
| Free cash flow | Build the cash flows for a project | Counting sunk costs and ignoring working capital |
| Risk and return, CAPM | Find an expected return or a beta effect | Mixing up beta, standard deviation, and the market premium |
| WACC, capital structure | Find a cost of capital or a tax effect | Using pre-tax debt cost and book weights |
The math is rarely the hard part. Most lost points come from reading the question wrong: a quarterly rate used for monthly payments, an extra number put in to distract you, or a calculator setting left over from the last problem.
Exams differ more than students expect
Two courses at different business schools show how much the rules vary. At one business school, each midterm covered only the block of chapters since the last exam, a financial calculator was required, and no exam score was ever dropped. At another, the second midterm was cumulative, only a scientific calculator was allowed, and if the final exam percentage beat the lowest midterm, that midterm's weight moved to the final.
Those differences change how you study. A cumulative exam means older topics come back, so a shaky time value of money foundation costs you again. A course that never drops a score means a bad first exam is permanent and the next one matters more. Read your syllabus for the topic list, the calculator rule, whether you can bring a formula sheet, and how the final and midterms are weighted.
A one-week plan before the exam
- Day 1: Gather the syllabus, your slides, your problem sets, and your last exam. Confirm which calculator is allowed and whether you may bring notes.
- Day 2: Redo your last exam without notes. Mark each miss as a concept, a setup, a wording trap, or arithmetic.
- Days 3 to 5: Work through the topics where you lost the most points, one at a time, with fresh problems. Say each setup out loud before you calculate.
- Day 6: Do a timed set that mixes every topic and use the exact calculator you will bring.
- Day 7: Review the traps from your own misses, check your calculator, and stop early enough to sleep.
Things that quietly cost points
- Studying only the formulas. Practice finding which formula a question needs.
- Practicing on a different calculator than the one allowed in the exam room.
- Skipping the problem sets you did badly on, which are the best preview of what the exam will test.
- Starting with the hardest question. Do the quick ones first and bank the points.
- Leaving no time to check signs and units at the end.