Course 2 - how to master finance?

[VernSchil]

So far interest theory has been going well, but I've been having an extremely difficult time focusing on, learning, and retaining the finance. My observation so far is that simply memorizing the formulas is not sufficient and will allow you to only answer a very small percentage of the questions correctly, as the exam seems to require a very strong understanding of the underlying principles. For someone like me with absolutely no background in finance, I'm finding it very difficult to get from the B&M book a very basic, rudimentary understanding of what is actually going on. Could anyone who had a lot of success with finance without any prior experience please share with me how you did it? Does just doing problem after problem work? Was there any study guide that you found particularly effective at teaching the material? An alternative textbook, or should I not give up on B&M just yet and reread things over numerous times? Thank you.

[retaker]

Bamma Gambler suggests getting HTP for finance. He passed, but it sounds like HTP is not going to give you much detail just formulas and maybe tricks, which actually may be better than excessive knowlege on these exams.
I used CSM. Almost passed and Finance was my strongest. I am probably going to buy HTP near the end and read that too just for over kill since I have already gone over almost all the material (which I already knew! Well 80% of it anyway) and done almost all the CSM problems yet AGAIN.

[retaker]

By the way, if anybody has a HTP and is willing to sell it, let me know.

If not then I will be selling mine immediately after the exam, so course 1 takers keep your eyes out.

[drctypea]

i agree with retaker...i read the text and used the csm exclusively for problems...there are some important topics that you really should focus on...i.e. options, capm model, pricing of stocks, wacc, and a couple others..i remember concentrating on the beginning and end of the book and really nothign else...

[Sachin]

Hi:

I am refering to this post by you a few months ago. I am in the same boat currently and wanted to find out what worked for you in terms of mastering finance. Specifically, was there an effective getting around the very dry brealey myers text mtrl or did you have to plough through it.


Please let me know. Thanks.

Sachin

So far interest theory has been going well, but I've been having an extremely difficult time focusing on, learning, and retaining the finance. My observation so far is that simply memorizing the formulas is not sufficient and will allow you to only answer a very small percentage of the questions correctly, as the exam seems to require a very strong understanding of the underlying principles. For someone like me with absolutely no background in finance, I'm finding it very difficult to get from the B&M book a very basic, rudimentary understanding of what is actually going on. Could anyone who had a lot of success with finance without any prior experience please share with me how you did it? Does just doing problem after problem work? Was there any study guide that you found particularly effective at teaching the material? An alternative textbook, or should I not give up on B&M just yet and reread things over numerous times? Thank you.

[Avi]

I used HTP as the basis to learn finance. While it is rife with errors, nevertheless it allowed me to focus on what seemed to be the core principles and cut out the less important parts.

Dr. Smith of the NEAS seminar was also very good at explaining Finance, especially given the fact that he only had one day to do so.

[sunshine]

I suggest finding a way to learn it verbally, as opposed to a problem-solving approach. The two ways I know of would be 1) attend a seminar, or 2)find a parter whom with to discuss the material. For the latter approach, talk about the different concepts. Ask "what do you think this means?" See if you can explain to one another in words what they mean. Try to relate them to other concepts in the text.

[Wigmeister General]

Change professions.

[VernSchil]

Unfortunately, I couldn't find anyway around ploughing through the text. I think what really messed me up at first was the order of the chapters. When I made that post several months ago, I was on Chapter 9, which in my opinion is a terribly placed chapter in the book. Chapter 9 is pretty much an introduction to several topics that will be examined in much greater detail later on (WACC, Debt vs. Equity, etc). I think with finance, at least in my case, you won't get it for awhile and then all of a sudden a lightbulb will click on and everything will start making sense and you'll see how it all comes together. I still think I didn't do that great on the finance portion of Course 2. Interest theory and Micro were definitely what saved me. There was just to much finance to memorize, although I think you can skip a lot of it . The chapter "net present value is a black box" or something like that. I think it's 10 or 11 has never had a question asked from it. A lot of the teen chapters also are rarely tested. The most important things to have mastered in finance are:
-CAPM and Beta
-WACC
-Options
-Effecient Market Hypothesis
- All the ratios from chapter 28
- Debt vs. Equity (MMI and MMII)

I would guess that between 50-75% of the finance questions come from these select topics.