CBSE Board has introduced financial mathematics as one of the subtopics under the Applied Maths Syllabus. 

The main aim of the financial mathematics course is to assist you in creating and progressing your mathematical skills and techniques related to all kinds of Finances.

This post takes you through complete details about CBSE Class 12 Basics of Financial Mathematics.

What is Financial Mathematics?

Financial Mathematics is the application of mathematical methods to financial problems. Some of the concepts used in Financial mathematics are quantitative finance, financial engineering, mathematical finance, and computational finance. Quite often, Financial mathematics is regarded and interchangeably used for these concepts.

Explaining in simpler words, Maths used in relation to cash/ money/ finances is Finance Mathematics. 

The aim of the CBSE Class 12 Financial Mathematics Syllabus is to appreciate the significance and utility of mathematics that makes it mandatory for almost every other finance-related field.

Read about: CBSE Class 12 Applied Maths Inferential Statistics

CBSE Class 12 Financial Mathematics Syllabus

Class 12 Syllabus of Financial Mathematics encapsulates topics such as Perpetuity, Sinking Funds, Valuation of Bonds, EMIs, rates of Return, Interest, Growth rate, Knowledge of Stocks and Shares, Debentures, and Concept of Appreciation and Depreciation.

These topics become the foundation of Financial Mathematics that you will be learning in your higher studies. Some of the topics should be familiar while some will definitely be alien to you.

Let us look at Class 12 Financial Mathematics topics in detail.

  • Perpetuity, Sinking funds
  • Valuation of Bonds (Present value approach and Relative price approach)
  • Calculation of EMI
  • Calculation of returns, nominal rate of return, effective rate of interest
  • Compound annual growth rate
  • Stock, shares, and debentures
  • Linear method of depreciation

What to Expect from Financial Mathematics in CBSE Class 12 Exam?

Financial Mathematics expects you to develop a sound mathematical language and symbolism to communicate and relate everyday experiences mathematically.

In our quarterly, yearly, and half-yearly examinations, we should be ready for some loaded calculations involving some huge numbers. The questions are expected to be straight forward and they might even resemble some from NCERT and reference textbooks.

The questions in CBSE Class 12 Financial Mathematics test your adaptability to fast yet simple arithmetic with real-life numbers. You should not be afraid of dealing with sums of large numbers. Instead, you should be agile and vigilant for any errors on the part of your calculations.

It also expects you to reinforce logical reasoning skills. You are required to formulate and establish mathematical arguments, frame examples, find counterexamples, validate equations and others.

CBSE Financial Mathematics utilizes the application of other areas of mathematics too in addition to Arithmetic. Areas such as Algebraic methods are used as a means of representation. They are also used as a problem-solving tool in Class 12 Financial Mathematics. It is something that you should expect in the Class 12 Financial Mathematics Examination.

When you are thorough with this topic, you will know how to calculate your taxes. You will know how to find the value of an asset in the present time and based on its current value, you will also be able to predict it for a future date. You will also have developed a sound understanding of shares and Values of Stocks, Appreciation of assets, and their depreciation too.

Read about: CBSE Class 12 Numerical Applications

CBSE Class 12 Financial Mathematics Preparation Tips

Financial Mathematics, like every other subject, demands thorough study and consistent revision for success. Since Financial Mathematics is a subset of CBSE Class 12 Mathematics, you are required to spend some extra time learning the concepts and solving as many problems as possible.

Going through the Syllabus

Let the syllabus be your guiding light in your journey towards acing the CBSE Class 12 Financial Mathematics.

With the help of the Syllabus, you will know while looking at any sub-topic, whether it is relevant or not. That level of understanding will develop only if you have studied the syllabus thoroughly and are aware of every nook and corner of it.

Use Real-Life Examples:

Since Financial mathematics is all about using maths to calculate your finances, you should introduce real-life problems in Financial Mathematics. Practicing something original and from the real world will clear all your doubts. It will also enhance your understanding of the subject multi-fold.

Although solving a question from the book is important, this unconventional method is the real deal and should be practiced using the concepts of the Financial Mathematics Textbook. 

Calculate your parents' Taxes/ EMIs/ Stock Shares

Try to assist your parents in doing their taxes to better understand the nuances in it. Additionally, you can use the data from BSE and NASDAQ to solve questions. It will help you understand how financial Mathematics is an elemental part of everyone’s daily life.

Solve a Reference Book

CBSE Class 12 Financial Mathematics Reference Books are great additions to textbooks. In this time of stiff competition and hunger to learn more and more every day, reference books are the great go-ahead.

Practise Previous Year papers

Solving Previous Year papers will keep you up and running with the style of questions asked in previous years and the best methods used to calculate the answer. Also, it will help improve your time management skills and problem-solving skills.

Don’t depend on calculators. Use your head

The more you solve CBSE Class 12 Financial Mathematics sums in your head, the better you become at it. Consider it as a workout for your brain. Calculating sums in your brain will help increase your calculation speed, mental memory, and storage ability. Which in turn helps you solve even bigger and more complex questions later.

CBSE Class 12 Financial Mathematics Study Material

To ace the CBSE Class 12 Financial Mathematics exam, books and notes are your biggest friends and mock papers or previous year papers are your cheerleaders. 

Books will help you stay on the right path because subjects such as mathematics have no boundary and you never know when you are reading something outside your syllabus and gathering irrelevant information.

Let us take a look at the list of CBSE Class 12 Financial Mathematics reference books that you can refer to while preparing for the Financial Mathematics Exam.

  • Suncos, Handbook for Mathematics
  • Master the NCERT Mathematics

Check Tips: CBSE Class 12 Applied Maths Algebra

CBSE Class 12 Financial Mathematics Sample Questions

Practicing sample questions will help you develop an independent idea and understanding of the subject in depth. To help you get an idea about the type of questions that can be asked in the exam, we have provided few sample questions here.

  1. Calculate the needed amount that must be invested every year so that the total amount sums up to Rs. 3,00,000 by the end of 10 years. The rate of interest is 10%, compounded annually.
  2. Ram makes an investment of Rs. 3,000 for two years. He gets a rate of interest of 12%. Furthermore, calculate the future value of the investment.
  3. Radha wants to retire from her job and get hold of Rs. 3,000/month. She wants the money to go to the future generation after she dies. She will earn an interest rate of 8% compounded annually. What is the total amount she will need to achieve the perpetuity goal?
  4. Suppose that the rate of discount is 7%. So, how much one must pay to receive Rs. 50 that grows at an annual rate of 5%, forever?
  5. Rahul plans on buying a 3-year bond having Rs. 1000 par value at an interest rate of 10%. Find the price at which one can purchase the bond after maturation at par and if Rahul requires the return of 14%.
  • Rs. 915
  • Rs. 907
  • Rs. 902
  • Rs. 917.

       6. Find the EMI for a property that is mortgaged of principal amount Rs. 5,00,000 at a rate of interest, 3.5% for a period of 10 years.

  • Rs. 1657
  • Rs. 1647
  • Rs. 1523
  • Rs. 1547

       7. In a bank, an amount of Rs. 20,000 is deposited for one year. The rate of interest is 8% per annum and is compounded semi-annually. What is the effective rate of interest?

  • 8 per cent
  • 8.08 per cent
  • 8.16 per cent
  • 8.22 per cent

Read about: CBSE Class 12 Applied Maths Probability


I am stressed over Financial Mathematics? How to get over it?

Acknowledge your negative thoughts regarding your CBSE Class 12 Financial mathematics Strategy. Process them. Reason with them. You'll realise how unrealistic they are. Challenge the thoughts that say you cannot do Financial mathematics Problems and you can't succeed. Remind yourself that it is just a subject and like you have aced all your subjects till now, you will also ace this one.

What if I do badly in Financial Mathematics?

It is okay if you do bad, after all it is just an exam. That is, it. it is not the end of the world. People/ students make mistakes, sometimes, even blunders in their exams, but that doesn’t make them unintelligent. Learn from your mistakes and use them as guiding light for your next exam.

How to attempt CBSE Class 12 Financial Mathematics Sample papers?

  • Start a timer.
  • Make it a exam room like condition
  • Keep all your stationery, water bottle and everything you need with you.
  • Do not leave your desk until the timer stops.
  • Answer each and every question as guided.
  • Ask your folks not to disturb you while you are giving the exam.
  • Do not exceed the timer.
  • Do not cheat.
  • Do not take help from the book.

How to analyse CBSE Class 12 Financial Mathematics Sample paper Performance?

  • Consider yourself a teacher while analysing your Financial mathematics Sample papers.
  • Check each and every step.
  • Do not assume anything.
  • If something is missing in the solution, or something is not as clear as it should be, penalise yourself for that.
  • Calculate the total marks and reduce 10% for exam related frenzy.
  • Additionally, as a post-test exercise, Divide the topics asked into three lists of

    • Stronghold,
    • Territorial, and
    • Alien

    Strongholds would be the ones you are best at and no question can steal marks away from you in these topics. Territorial would be a list of topics that you are good at but still has room for improvement. Alien topics would be the list of topics that are totally new to you and you never know how to begin in questions from these topics.


What if I don't get the marks I'm expecting in Financial Mathematics?

It is okay. You know what your stronghold, territorial and alien subjects are. Make a realistic expectation of how you should be performing in the tests. And keep updating that list on the basis of your performance

How do I deal with my family's disappointment if my results are not good in CBSE Class 12 Applied Maths?

Remember. This is your exam. The person that is and should be most affected by the result is you. What matters is how you feel about your result and performance. When it comes to family and academics, things go a little over the board, no doubt.

What you can do is;

  • Be open and honest with them.
  • Converse your feelings about the result and what you think went wrong, if any did.
  • Reassure them of your concerns and efforts.
  • Most importantly, Don’t have any negative bias against your parents because sometimes people need just a little more reassurance.