Finance Fundamentals
A Premium Exam & Concept Mastery Guide
1. Introduction: Why Finance Is Critical for Exams, Grades, and
Real Life
Finance is not just a subject—it is a decision-making skill. Every major business choice, investment
plan, or personal money decision is rooted in finance. In exams, finance tests your ability to think
logically with numbers, understand relationships between risk and return, and apply formulas
correctly.
Many students struggle with finance because concepts feel abstract. This guide removes that fear by
explaining finance step by step, exactly how a private tutor would—linking theory to numbers, and
numbers to exam marks.
If you understand finance, you don’t just pass exams—you gain a skill that pays for life.
2. Learning Outcomes: What You Will Master
After completing this guide, you will be able to:
• Understand core finance principles clearly
• Explain financial terms in simple language
• Apply time value of money concepts correctly
• Calculate and interpret returns, risk, and interest
• Make sense of financial decisions asked in exams
• Avoid common finance mistakes students lose marks for
• Confidently attempt exam and practice questions
3. What Is Finance? (Simple Definition)
Finance is the study of how money is:
• Raised (funding)
• Invested
• Managed
• Used to make decisions
In simple words:
Finance is about making smart decisions with money—today and for the future.
1
, 4. Core Areas of Finance (Exams Love This Section)
4.1 Personal Finance
Deals with managing individual income, savings, spending, and investments.
Examples: - Budgeting - Saving - Loans
4.2 Corporate Finance
Focuses on how businesses raise capital and invest it efficiently.
Examples: - Issuing shares - Borrowing funds - Investment decisions
4.3 Public Finance
Deals with government income and spending.
Examples: - Taxes - Public expenditure - Budget deficits
5. Time Value of Money (VERY IMPORTANT FOR EXAMS)
Key Idea:
Money today is worth more than the same amount in the future.
Why? - Inflation - Earning potential - Risk
Simple Interest Formula:
SI = P × R × T
Where: - P = Principal - R = Rate - T = Time
Compound Interest Formula:
A = P (1 + r)^t
Worked Example:
If you invest $1,000 at 10% for 2 years:
A = 1,000 (1.10)^2 = $1,210
2
A Premium Exam & Concept Mastery Guide
1. Introduction: Why Finance Is Critical for Exams, Grades, and
Real Life
Finance is not just a subject—it is a decision-making skill. Every major business choice, investment
plan, or personal money decision is rooted in finance. In exams, finance tests your ability to think
logically with numbers, understand relationships between risk and return, and apply formulas
correctly.
Many students struggle with finance because concepts feel abstract. This guide removes that fear by
explaining finance step by step, exactly how a private tutor would—linking theory to numbers, and
numbers to exam marks.
If you understand finance, you don’t just pass exams—you gain a skill that pays for life.
2. Learning Outcomes: What You Will Master
After completing this guide, you will be able to:
• Understand core finance principles clearly
• Explain financial terms in simple language
• Apply time value of money concepts correctly
• Calculate and interpret returns, risk, and interest
• Make sense of financial decisions asked in exams
• Avoid common finance mistakes students lose marks for
• Confidently attempt exam and practice questions
3. What Is Finance? (Simple Definition)
Finance is the study of how money is:
• Raised (funding)
• Invested
• Managed
• Used to make decisions
In simple words:
Finance is about making smart decisions with money—today and for the future.
1
, 4. Core Areas of Finance (Exams Love This Section)
4.1 Personal Finance
Deals with managing individual income, savings, spending, and investments.
Examples: - Budgeting - Saving - Loans
4.2 Corporate Finance
Focuses on how businesses raise capital and invest it efficiently.
Examples: - Issuing shares - Borrowing funds - Investment decisions
4.3 Public Finance
Deals with government income and spending.
Examples: - Taxes - Public expenditure - Budget deficits
5. Time Value of Money (VERY IMPORTANT FOR EXAMS)
Key Idea:
Money today is worth more than the same amount in the future.
Why? - Inflation - Earning potential - Risk
Simple Interest Formula:
SI = P × R × T
Where: - P = Principal - R = Rate - T = Time
Compound Interest Formula:
A = P (1 + r)^t
Worked Example:
If you invest $1,000 at 10% for 2 years:
A = 1,000 (1.10)^2 = $1,210
2
