IAI Actuarial Core Principles · Paper CB1
Business Finance (CB1) Paper Guide for IAI Actuarial
Business Finance (CB1) is a Core Principles paper in the Business module. It is a written exam of 3 hours 15 minutes for 100 marks, opening with multiple-choice questions and then written questions. You prepare by mastering corporate finance, valuation and accounts topics, practising past papers under timed conditions, and writing short, structured answers.
CB1 Business Finance tests how a company is run, financed and judged. The 2026 syllabus covers four areas: corporate governance and organisation (18%), how corporates are financed (35%), evaluating projects (15%) and company accounts (32%). Your twelve chapters map onto these areas. Financing and company accounts together carry the largest share, so they deserve the most of your time.
CB1 is a written exam of 3 hours 15 minutes for 100 marks in recent papers. It opens with multiple-choice questions of 2 marks each. Recent papers have had 10 (20 marks), but IAI does not fix the number, so it can change between sessions. The written questions follow. The pass mark is 50%, though IAI may amend it session by session and confirms it with results. Check the current rule before you sit.
Students usually find CB1 a mix of two skills. Some parts are calculation: cost of capital, project appraisal, ratios and accounts. Other parts are discussion: governance, ethics, financing choices and restructuring. Students from a maths background tend to be comfortable with the numbers and lose marks on discussion answers that are thin or lack application. Students with a commerce background often show the opposite pattern. Find your weak side early and train it.
Business Finance: chapters and topics
Corporate governance and organisation
Regulation of financial reporting of incorporated entities
Corporate governance and organisation
Corporate governance and the regulation of companies
Corporate governance and organisation
Key principles of finance
Corporate governance and organisation
Ethical responsibilities of owners and managers
How corporates are financed
Structure and methods of financing a company
How corporates are financed
Personal and corporate taxation
How corporates are financed
Financial instruments issued or used by companies
How corporates are financed
Capital structure and dividend policy
How corporates are financed
Corporate growth, restructuring and divestment
Evaluating projects
Cost of capital and evaluating investment projects
Constructing and interpreting company accounts
Construction and features of company accounts and reports
- Purpose and Users of Company Accounts
- Financial Reporting Framework and Accounting Principles
- Statement of Financial Position (Balance Sheet)
- Statement of Profit or Loss and Comprehensive Income
- Cash Flow Statement
- Statement of Changes in Equity and Notes to Accounts
- Directors' Report and Audit Report
- Group Accounts and Consolidation Basics
Constructing and interpreting company accounts
Interpreting company accounting information
How to prepare Business Finance
Plan for steady work across all twelve chapters, with extra weight on financing and company accounts. Use short daily sessions that fit around your job, and make each one active: write, calculate, recall.
- Map the chapters to the four syllabus areas. Put financing chapters (structure and methods of financing, financial instruments, capital structure and dividend policy, growth and restructuring) and the accounts chapters (construction of accounts, interpreting accounting information, regulation of financial reporting) at the top of your plan.
- Build your foundation first. Start with key principles of finance, then work through financing and instruments. Later chapters, such as cost of capital and capital structure, assume you already understand risk, return and the time value of money.
- For each chapter, write a one-page summary from memory: key definitions, the main arguments for and against each choice, and any formulas. Then check it against your notes and fix the gaps. Phone-friendly flashcards work well for definitions.
- Practise the calculation chapters daily. Work through cost of capital, project appraisal methods, tax effects and ratio analysis. Write the formula, state your assumptions, show each step and label the result with units.
- Practise discussion answers. Take a topic such as governance, ethics or capital structure and write four or five clear points, each with a reason and a link to the situation in the question. Avoid listing points with no explanation.
- Practise accounts as a connected set. Know how the income statement, balance sheet and cash flow statement link, then interpret a set of ratios and say what they suggest about the company, not just what they equal.
- Move to past papers about six weeks before the exam. Do the multiple-choice section first as a timed block, then written questions under full exam timing. Mark yourself honestly against the examiners' reports and note every lost mark.
- In the final fortnight, revise from your error log and summaries. Redo questions you got wrong. Do not start new material in the last few days.
Time management in the exam
- Treat the paper as 100 marks in 195 minutes. That is a little under 2 minutes per mark. Use this as your pacing rule, and note the time each question should finish.
- Do the multiple-choice questions in a fixed block first. Each is 2 marks, so do not spend long on one. Mark it, move on and return if time remains.
- Read all the written questions before you start. Begin with the one you feel surest about to build confidence and bank marks.
- For each written question, spend the first minute or two planning. Jot down the points or the calculation steps. This stops you drifting and makes answers more structured.
- Do not abandon a long calculation halfway for the sake of perfect accuracy. Show the method and formula clearly, as method marks are available even if the arithmetic slips.
- Keep the last 10 to 15 minutes for checking: units, signs, missed parts of questions, and any blank answers you can still attempt.
Mistakes that cost marks in Business Finance
Treating CB1 as a pure calculation paper
Fix: Give every theory chapter its own revision slot. Practise writing short structured answers with reasons and application to the scenario.
Writing generic discussion answers
Fix: Link each point to the company described: its size, risk, tax position or stage of growth. A point with a reason and a link earns more than a bare list.
Weak understanding of company accounts
Fix: Practise building and interpreting accounts regularly. Understand how the statements connect and what each ratio says about the business.
Memorising formulas without stating assumptions
Fix: Next to each formula in your notes, write when it applies and what it assumes. In the exam, state your assumptions before you calculate.
Ignoring tax in financing and project questions
Fix: Make a checklist for calculation questions that includes tax. Ask whether interest is deductible, whether dividends are taxed and whether tax affects the cash flows.
Poor pacing and leaving written questions unfinished
Fix: Set time limits per question, practise under full timing, and move on when you hit your limit. Partial answers across all questions score better than one perfect answer and two blanks.
Business Finance: frequently asked questions
How is the CB1 Business Finance exam structured?
CB1 is a written exam of 3 hours 15 minutes. Recent papers carry 100 marks and open with multiple-choice questions of 2 marks each, followed by written questions. The number of multiple-choice questions is not fixed, so check the latest paper and IAI notices.
What is the pass mark for CB1?
For CB1, CB2 and CB3 the pass mark is at least 50%. IAI may amend the pass mark session by session and confirms it with results, so check the current rule before your exam.
Which CB1 topics matter most?
On the 2026 syllabus, how corporates are financed has 35% and company accounts 32%. Corporate governance and organisation has 18% and evaluating projects 15%. Cover all areas, but give financing and accounts the most time.
Is there a computer-based paper for CB1?
No. CB1 is a written examination. The Paper A and Paper B structure, with a computer-based Paper B, applies to CS and CM subjects, not to CB1.
How should I study CB1 while working?
Use short daily sessions on your phone for definitions and recall, and longer weekend blocks for calculations and past papers. Keep an error log of every mark you lose and revise from it in the final weeks.