ThatQuiz Test Library Take this test now
Business Finance - Pre Test
Contributed by: Escalera
  • 1. It is a financial intermediary handling individual savings. It receives premium payments placed in loans or investments to accumulate funds to cover future benefits.
A) life insurance company
B) savings bank
C) commercial bank
D) credit union
  • 2. Which of the following is NOT a financial institution?
A) An insurance company
B) A pension fund
C) A newspaper publisher
D) A commercial bank
  • 3. It is a set up so that employees of corporations or governments can receive income after retirement.
A) credit union
B) savings bank
C) life insurance company
D) pension fund
  • 4. It is a type of financial intermediary that pools savings of individuals and makes them available to business and government users. Funds obtained through the sale of shares.
A) Credit Union
B) Commercial banks
C) Mutual Funds
D) Savings and loans
  • 5. Most businesses raise money by selling their securities in a
A) private placement
B) stock exchange
C) direct placement
D) public offering
  • 6. Which of the following is NOT a service provided by financial institutions?
A) Buying the businesses of customers
B) Lending money to customers
C) Paying savers’ interest on deposit
D) Investing customers’ savings in stocks and bonds
  • 7. By definition, the money market involves the buying and selling of
A) stocks and bonds.
B) flows of funds.
C) funds that mature in more than one year.
D) short-term funds
  • 8. It creates financial relationship between suppliers and users of short-term funds.
A) stock market
B) capital market
C) money market
D) financial market
  • 9. Firms that require funds from external sources can obtain them from
A) financial institutions
B) private placement
C) All of the above.
D) financial markets
  • 10. The science and art of managing money
A) Management
B) Personal Finance
C) Financial Management
D) Finance
  • 11. What are the two management functions reinforce each other for the success of an organization?
A) Organizing and Planning
B) Planning and Controlling
C) Controlling and Directing
D) Staffing and Planning
  • 12. Which of the following is NOT part of financial planning process?
A) Set goals/Objectives
B) Identify resources
C) Identify goal related task
D) Establish strong Management
  • 13. A plan expresses in quantitative terms, which emphasizes the resource use and resource allocation of an entity over a specified period of time?
A) Sales
B) Sales Budget
C) Cash Budget
D) Budget
  • 14. Which of the process to closely monitoring of in and out of cash in the business?
A) Statement of financial Position
B) Cash flow statement
C) Budgeting
D) Income statement
  • 15. It is a tool of the company to set an overall goal of what the company’s performance and position will be for and as of the end of the year.
A) Inventory
B) Forecasting
C) Projected Financial Statement
D) Budgeting
  • 16. Components of a firm’s cash conversion cycle include:
A) average age of inventory, average collection period and average payment
B) average age of inventory and average payment period
C) average collection period, average age of inventory
D) average payment, average collection period
  • 17. Which of the following statements is true regarding working capital management?
A) There is a risk and profitability tradeoff in working capital management
B) A firm’s working capital is not essential in managing its operations
C) All statements are true
D) Cash, inventory and long-term receivables are common working capital components
  • 18. Which of the following is NOT a common collection technique for accounts receivables?
A) making phone calls
B) sending letter of demands
C) sending legal notices
D) writing off customer’s accounts
  • 19. It is a technique used in granting credit to customers.
A) Credit standards
B) Credit score
C) All of the above
D) Credit limit
  • 20. It represents assets of the entity that expected to be collected and thus, converted to cash.
A) Inventory Management
B) Cash Management
C) Marketable Securities Management
D) Accounts Receivable Management
  • 21. In a loan amortization schedule, interest payments for each period would most probably
A) There are no interest payments in the schedule
B) Decrease overtime
C) Increase overtime
D) Remain the same
  • 22. The formula (1 + i)n is also called
A) future value factor for lump-sum payment
B) present value factor for ordinary annuity
C) present value factor for lump-sum payment
D) future value factor for ordinary annuity
  • 23. An increase in the present value may be caused by
A) decrease in the discount rate
B) increase in the discount rate
C) none of the above
D) discount rate does not affect the present value
  • 24. Interest payments that are based on the original principal and previous interest recognized is based on
A) simple interest rate
B) present value
C) compound interest rate
D) future value
  • 25. The time value of money suggest that a peso received today is worth
    a peso received in the future.
A) less than
B) the same as
C) none of the above
D) more than
  • 26. What is a bond?
A) It is a security that represents partial ownership in a business.
B) None of the above.
C) It is a security that represents the debt of a government or a business that promises to pay a fixed amount.
D) It is a security that represents the equity of a government or a business that promises to pay a fixed interest.
  • 27. A business owned by two or more people and operated for profit.
A) Sole Proprietorship
B) Cooperative
C) Corporation
D) Partnership
  • 28. An entity created by law owned by shareholders. Overall objective of a shareholder should be wealth maximization
A) Sole Proprietorship
B) Partnersip
C) Corporation
D) Cooperative
  • 29. Rational investors will seek efficient portfolios because these portfolios are optimal based on:
A) Risk
B) Expected return and risk
C) Transaction cost
D) Expected return
  • 30. Most investors are assumed ________.
A) Risk neutral
B) Risk seekers
C) Risk averse
D) Risk moderators
  • 31. Who will decide on the declaration of dividends in a corporation?
A) The stock exchange on which the stock is listed
B) The board of directors of the firm
C) The shareholders of the corporation
D) The president of the company
  • 32. What is the difference between shares and bonds?
A) Shares and bonds both represent liabilities
B) Bonds represent ownership whereas shares do not.
C) Shares represent ownership whereas bonds do not.
D) Shares and bonds both represent equity
  • 33. How should one think of stocks?
A) One should not think of stocks as being synonymous with a good business.
B) One should think of stocks as pieces of businesses.
C) One should think of stocks as chips in the casino.
D) Both A and B
  • 34. Why do different investors estimate inputs differently? Because _____
A) there is a random selection process used by individual investors
B) there is an inherent uncertainty in security analysis
C) every investor has access to different information about securities
D) every investor has his/her own risk/return preferences
  • 35. Of the following four investments, which is considered the safest?
A) Treasury bills
B) corporate bonds
C) Commercial papers
D) Treasury bonds
  • 36. Shares and bonds are floated in _________
A) Capital market
B) Money market
C) Equity market
D) Commercial bank
  • 37. If you want to deposit money in a bank, which will be a wise choice?
A) Compounding annually
B) Compounding semi-annually
C) Compounding daily
D) Compounding monthly
  • 38. Which of the following help determine risk tolerance?
A) Expected return and risk
B) Net worth and risk capital
C) Net worth and net earnings
D) Assets and liabilities
  • 39. Which of the following assets are considered medium risk investments?
A) Bank deposits
B) Money market
C) Government bonds
D) High income bonds
  • 40. Which are NOT considered as key participants in the investment process?
A) Government
B) Charitable institutions
C) Business
D) Individuals
  • 41. Saving money means giving up the opportunity cost to
A) save money
B) apply for credit cards
C) spend in the present
D) have money in the future
  • 42. What is term for the money you earn?
A) Income
B) Interest
C) Expense
D) Savings
  • 43. In order to effectively manage money, you need a:
A) High paying job
B) Online checking account
C) Computer
D) Budget
  • 44. Which of the following money management principles describe frugality?
A) You are the boss of you.
B) Small amounts matter.
C) The perfect is the enemy of good.
D) Large amounts matter more.
  • 45. Practice thrift, but always be looking for Big Wins, best illustrates what principle of saving?
A) You are the boss of you.
B) Large amounts matter more.
C) Small amounts matter.
D) The perfect is the enemy of good.
  • 46. To make the most of your income and savings it is important to become:
A) Financial Literate
B) All of these
C) Smart
D) Proactive
  • 47. The expenses listed below all reduce the amount of cash an individual has available for saving and investing EXCEPT
A) Stocks
B) Travel
C) Entertainment
D) Food
  • 48. This relates to the purchase of assets that are expected to generate a rate of return, with the hope that over time the individual will receive back more money than they originally invested.
A) Investing
B) Saving
C) Protection
D) Income
  • 49. These sources of income all generate cash that an individual can use to either spend, save, or invest EXCEPT
A) Hourly wages
B) Taxes
C) Mutual funds
D) Bonuses
  • 50. This refers to a source of cash inflow that an individual receives and then uses to support themselves and their family.
A) Income
B) Spending
C) Saving
D) Investing
Students who took this test also took :

Created with That Quiz — a math test site for students of all grade levels.