FINANCIAL EDGE 2025/2026 QUESTIONS AND SOLUTION
RATED A+
✔✔Annuity - Financial Math - ✔✔A series of equal regular payments for a FINITE
period i.e there is indeed a maturity date
✔✔Annuity formula - Financial Math - ✔✔Where annuity would just be the PMT given
✔✔Growing Annuity - Financial Math - ✔✔A series of regular payments for a FINITE
period. The amount payed at each interval will have grown from the previous point.
i.e there is indeed a maturity date
✔✔Growing Annuity Value formula - Financial Math - ✔✔
✔✔Bond - ✔✔A fixed income financial security that represents a promise to repay a
fixed amount of funds
The person that needs money issues the bond and the person that buys it is paid
interest until the maturity date of the bond, at which point they will also receive the
original principal payment for the bond
i.e their money back plus interest
NB: Bond prices are inversely correlated with interest rates: when rates go up, bond
prices fall and vice-versa.
✔✔Yield - Financial Math - ✔✔the annual rate of return on an investment
✔✔Yield or rate of return Formula - Financial Math - ✔✔r = (FV/PV)^(1/n) - 1
NB: IRR here should be Rate of Return
✔✔Internal Rate of Return (IRR) - Financial Math - ✔✔the discount rate that makes the
future cash flows of an investment equal to the initial investment
i.e what is the discount rate that would get you back to your original investment
✔✔IRR Formula - Financial Math - ✔✔
✔✔proprietary trading - ✔✔use of bank funds to make investments for their own
account as opposed to trading on behalf of another client
✔✔Difference between corporate and investment banking - ✔✔Investment banking
grows a company, while corporate finance manages a company.
, A corporate finance professional deals with day-to-day financial operations and handles
short- and long-term business goals,
while an investment banker focuses on raising capital.
✔✔Equity - ✔✔Equity is the amount of an asset that you own.
If you have a house at a certain market value, but you are carrying a mortgage, then the
bank might very well own more of the property than you do. However, as you pay down
the mortgage, you gradually increase the share of the house that is owned by you, while
decreasing the portion that is owned by the bank. Your equity in that investment, the
house, increases.
✔✔Asset - ✔✔Anything of value that is owned
It could be an appreciating asset, meaning that it grows in value, or it could be a
depreciating asset, meaning that it loses value.
✔✔Investment Banking - ✔✔a specific division of banking related to the creation of
capital for other companies, governments, and other entities.
Investment banks underwrite new debt and equity securities for all types of
corporations, aid in the sale of securities, and help to facilitate mergers and acquisitions,
reorganizations
✔✔Underwriting Debt - ✔✔purchasing debt securities from the issuer with the goal of
selling the debt securities at a profit, known as the "underwriting spread."
✔✔Initial Public Offering (IPO) - ✔✔The first public offering of a corporation's stock.
An initial public offering (IPO) refers to the process of offering shares of a private
corporation to the public in a new stock issuance. Public share issuance allows a
company to raise capital from public investors. The transition from a private to a public
company can be an important time for private investors to fully realize gains from their
investment as it typically includes share premiums for current private investors.
Meanwhile, it also allows public investors to participate in the offering.
NB: The use of the word 'public' here is interchangeable with retail or personal. Do NOT
consider it to be governmental in this regard.
✔✔Financial Markets - ✔✔refer broadly to any marketplace where the trading of
securities occurs, including the stock market, bond market, forex market, and
derivatives market, among others.
RATED A+
✔✔Annuity - Financial Math - ✔✔A series of equal regular payments for a FINITE
period i.e there is indeed a maturity date
✔✔Annuity formula - Financial Math - ✔✔Where annuity would just be the PMT given
✔✔Growing Annuity - Financial Math - ✔✔A series of regular payments for a FINITE
period. The amount payed at each interval will have grown from the previous point.
i.e there is indeed a maturity date
✔✔Growing Annuity Value formula - Financial Math - ✔✔
✔✔Bond - ✔✔A fixed income financial security that represents a promise to repay a
fixed amount of funds
The person that needs money issues the bond and the person that buys it is paid
interest until the maturity date of the bond, at which point they will also receive the
original principal payment for the bond
i.e their money back plus interest
NB: Bond prices are inversely correlated with interest rates: when rates go up, bond
prices fall and vice-versa.
✔✔Yield - Financial Math - ✔✔the annual rate of return on an investment
✔✔Yield or rate of return Formula - Financial Math - ✔✔r = (FV/PV)^(1/n) - 1
NB: IRR here should be Rate of Return
✔✔Internal Rate of Return (IRR) - Financial Math - ✔✔the discount rate that makes the
future cash flows of an investment equal to the initial investment
i.e what is the discount rate that would get you back to your original investment
✔✔IRR Formula - Financial Math - ✔✔
✔✔proprietary trading - ✔✔use of bank funds to make investments for their own
account as opposed to trading on behalf of another client
✔✔Difference between corporate and investment banking - ✔✔Investment banking
grows a company, while corporate finance manages a company.
, A corporate finance professional deals with day-to-day financial operations and handles
short- and long-term business goals,
while an investment banker focuses on raising capital.
✔✔Equity - ✔✔Equity is the amount of an asset that you own.
If you have a house at a certain market value, but you are carrying a mortgage, then the
bank might very well own more of the property than you do. However, as you pay down
the mortgage, you gradually increase the share of the house that is owned by you, while
decreasing the portion that is owned by the bank. Your equity in that investment, the
house, increases.
✔✔Asset - ✔✔Anything of value that is owned
It could be an appreciating asset, meaning that it grows in value, or it could be a
depreciating asset, meaning that it loses value.
✔✔Investment Banking - ✔✔a specific division of banking related to the creation of
capital for other companies, governments, and other entities.
Investment banks underwrite new debt and equity securities for all types of
corporations, aid in the sale of securities, and help to facilitate mergers and acquisitions,
reorganizations
✔✔Underwriting Debt - ✔✔purchasing debt securities from the issuer with the goal of
selling the debt securities at a profit, known as the "underwriting spread."
✔✔Initial Public Offering (IPO) - ✔✔The first public offering of a corporation's stock.
An initial public offering (IPO) refers to the process of offering shares of a private
corporation to the public in a new stock issuance. Public share issuance allows a
company to raise capital from public investors. The transition from a private to a public
company can be an important time for private investors to fully realize gains from their
investment as it typically includes share premiums for current private investors.
Meanwhile, it also allows public investors to participate in the offering.
NB: The use of the word 'public' here is interchangeable with retail or personal. Do NOT
consider it to be governmental in this regard.
✔✔Financial Markets - ✔✔refer broadly to any marketplace where the trading of
securities occurs, including the stock market, bond market, forex market, and
derivatives market, among others.
