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

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