1.

Finance is concerned with the process institutions, markets, and instruments

involved in the transfer of money among and between individuals, businesses
and government.. Single line text.

(1/1 Point)
TRUE

2.Marginal analysis states that financial decisions should be made and actions
taken only when added benefits exceeds added costs.. Single line text.
(1/1 Point)
TRUE

3.Financial services are concerned with the duties of the financial manager..
Single line text.
(0/1 Point)
FALSE

Correct answers: FALSE
4.The board of directors is responsible for managing day to day operations and
carrying out the policies established by the chief executive officer.. Single line
text.
(1/1 Point)
FLASE

5.The capital expenditures analyst/manager is responsible for the evaluation and

recommendation of proposed asset investments and may be involved in the
financial aspects of implementation of approved investments.Question. Single
line text.
(0/1 Point)
TRUE

Correct answers: TRUE
6.Marginal analysis states that financial decisions should be made and actions
taken only when added benefits exceeds added costs.. Single line text.
(1/1 Point)
TRUE

7.The financial manager places primary emphasis on cash flows, the inflow and
outflow of cash.. Single line text.
(1/1 Point)
TRUE

8.The accrual method recognizes revenue at the point of sale and recognizes
expenses when incurred.. Single line text.
(1/1 Point)
TRUE

9.The corporate treasurer is the officer responsible for the firm’s accounting
activities, such as corporate accounting, tax management, financial accounting,
and cost accounting.. Single line text.
(0/1 Point)
FALSE

Correct answers: FALSE
10.High cash flow is generally associated with a higher share price whereas
higher risk tends to result in a lower share price.. Single line text.
(1/1 Point)
TRUE

11.When considering each financial decision alternative or possible action in

terms of its impact on the share price of the firm’s stock, financial managers
should accept only those actions that are expected to increase the firm’s
profitability.. Single line text.
(0/1 Point)
TRUE

Correct answers: FALSE
12.To achieve the goal of profit maximization, for each alternative being
considered, the financial manager would select the one that is expected to result
in the highest monetary return.. Single line text.
(1/1 Point)
TRUE

13.The wealth of corporate owners is measured by the share price of the stock..
Single line text.
(1/1 Point)
TRUE

14.Return and risk are the key determinants of share price, which represents the
wealth of the owners in the firm.. Single line text.
(1/1 Point)
TRUE

15.The profit maximization goal ignores the timing of returns, does not directly
consider cash flows, and ignores risk.. Single line text.
(1/1 Point)
TRUE
16.Higher risk tends to result in a higher share price since the stockholder must
be compensated for the greater risk.. Single line text.
(0/1 Point)

Correct answers: FALSE
17.The agency problem is the acquisition of a firm by another firm that is not
supported by management. Single line text.
(0/1 Point)

Correct answers: FALSE
18.Credit unions are the largest type of financial intermediary that handle
individual savings. Single line text.
(0/1 Point)

Correct answers: FALSE
19.Primary and secondary markets are markets for short term and long term
securities, respectively.. Single line text.
(1/1 Point)
FALSE

20.A mutual fund is a type of financial intermediary that obtains funds through
the sale of shares and uses the proceeds to acquire bonds and stocks issued by
various business and governmental units.. Single line text.
(1/1 Point)
FALSE

21.Financial markets are intermediaries that channel the savings of individuals,

businesses and government into loans or investments.. Single line text.
(1/1 Point)
FALSE

22.Money markets involve the trading of securities with maturities of one year or
less while capital market involve the buying and selling of securities with
maturities of more than one year.. Single line text.
(1/1 Point)
TRUE

23.A financial institution is an intermediary that channels the savings of

individuals, businesses, and governments into loans or investments. Single line
text.
(1/1 Point)
TRUE
24.A public offering is the sale of a new security issue—typically debt or preferred
stock—directly to an investor or group of investors.. Single line text.
(0/1 Point)

Correct answers: FALSE
25.Eurocurrency deposits arise when a corporation or individual makes a deposit
in a bank in a currency other than the local currency of the country where the
bank is located.. Single line text.
(1/1 Point)
TRUE

26.A primary market is a financial market in which pre-owned securities are

traded.. Single line text.
(1/1 Point)
FALSE

27.The Over-the-Counter (OTC) exchange is not an organization but an intangible

market for trading securities which are not listed by the organized exchanges..
Single line text.
(0/1 Point)

Correct answers: TRUE
28.The money market is a financial relationship created by a number of
institutions and arrangements that allows suppliers and demanders of long-term
funds to make transactions.. Single line text.
(0/1 Point)

Correct answers: FALSE
29.In the OTC market, the ask price is the highest price offered by a dealer to
purchase a given security.. Single line text.
(0/1 Point)

Correct answers: FALSE
30.An efficient market is a market that allocates funds to their most productive
use as a result of competition among wealth maximizing investors.. Single line
text.
(1/1 Point)
TRUE
31.Investors find Eurobonds attractive because they provide currency
diversification and because they provide anonymity to the investor wishing to
avoid payment of taxes.. Single line text.
(1/1 Point)
TRUE

32.The major purpose of the Sarbanes-Oxley Act of 2002 was to place caps on
the compensation that could be paid to corporate executives.. Single line text.
(0/1 Point)

Correct answers: FALSE
33.Institutional investors are professional investors who work on behalf of the
federal government to ensure fairness in the financial markets.. Single line text.
(1/1 Point)
FALSE

34.The true owners of a corporations are the board of directors. Single line text.
(1/1 Point)
FALSE

35.A “legal entity” which can sue and be sued, make and be party to contracts,
and acquire property in its own name is A CORPORATION. Single line text.
(1/1 Point)
TRUE

36.The financial manager recognizes revenues and expenses utilizing accrual

basis. Single line text.
(1/1 Point)
FALSE

37.Economic theories that the financial manager must be able to utilize for
efficient business operations, include among others supply and demand analysis.
Single line text.
(0/1 Point)

Correct answers: TRUE
38.The primary economic principle used in managerial finance is SUPPLY AND
DEMAND. Single line text.
(1/1 Point)
FALSE

39.The primary emphasis of the financial manager is the use of CASH FLOW.
Single line text.
(1/1 Point)
TRUE

40.The financial manager’s investment decisions determine both the mix and the
type of assets and liabilities found on the firm’s balance sheet. Single line text.
(0/1 Point)

Correct answers: FALSE
41.The wealth of the owners of a corporation is represented by profits.. Single
line text.
(0/1 Point)

Correct answers: FALSE
42.Question. Single line text.
(-/1 Point)
TRUE

43.The conflict between the goals of a firm’s owners and the goals of its non-
owner managers is the agency problem.. Single line text.
(1/1 Point)
TRUE

44.Profit maximization as the goal of the firm is NOT ideal because cash flows are
more representative of financial strength.. Single line text.
(1/1 Point)
FALSE

45.Return and risK have the same effect on share price.. Single line text.
(1/1 Point)
FALSE

46.A mutual fund is a financial intermediary that deals primarily in the transfer of
funds between consumers. Membership is generally based on some common
bond.. Single line text.
(0/1 Point)

Correct answers: FALSE
47.A credit union is a type of financial intermediary that pools savings of
individuals and makes them available to business and government demanders.
Funds are obtained through the sale of shares.. Single line text.
(0/1 Point)

Correct answers: FALSE
48.Most businesses raise money by selling their securities in a public offering..
Single line text.
(1/1 Point)
TRUE

49.The CAPITAL MARKET is created by a financial relationship between suppliers

and demanders of short term funds.. Single line text.
(1/1 Point)
FALSE

50.By definition, the money market involves the buying and selling of stocks and
bonds.. Single line text.
(0/1 Point)

Correct answers: FALSE
51.Preferred stock is a financial instrument, which has the attribute of a debt
because typically the investor is only entitled to receive a fixed contractual
amount.. Single line text.
(0/1 Point)

Correct answers: TRUE
52.Common stock is referred to as a fixed income instrument. Single line text.
(0/1 Point)

Correct answers: FALSE
53.Another term for external market is foreign market. Single line text.
(1/1 Point)
FALSE

54.A financial system is a system that allows the exchange of funds between
financial market participants. Single line text.
(1/1 Point)
TRUE

55.Price discovery function provides for an opportunity for investors to sell a

financial instrument, since it is referred to as a measure of the ability to sell an
assets at its fair market value. Single line text.
(1/1 Point)
FALSE

56.The goal of profit maximization would result in priority for EARNING per
share.. Single line text.
(1/1 Point)
 TRUE

57.Included in the primary activities of the financial manager are financial analysis
and planninG, making investment decisions making financing decisions, but not
analyzing and planning cash flow.. Single line text.
(1/1 Point)
FALSE

58.Convertible bonds are financial instrument that can be swapped for equity at
pre-specified conditions. Single line text.
(1/1 Point)
TRUE

59.A spot market is the market for immediate purchase and sale of a financial
instrument. Single line text.
(1/1 Point)
TRUE

60.Offshore market is the market where securities are sold and traded outside the
country of issuer. Single line text.

(0/1 Point)

Correct answers: FALSE

QUIZ2
1.The amount of money that would have to be invested today at a given interest
rate over a specified period in order to equal a future amount is called. Single
choice.

(2/2 Points)
present value interest factor
future value interest factor
present value
future value
2.Debbie borrows P3,500 from the bank at 12 percent annually compounded
interest to be repaid in four equal annual installments. The interest paid in the
first year is. Single choice.

(3/3 Points)
152
277
420
1,152
3.It is the relationship between the interest rate of return and the time to
maturity. Single choice.

(0/2 Points)
real interest rate
term structure of interest rate
yield to maturity
interest rate
4.A secured short-term bearer notes issued by large private corporation to
provide short-term investments with a broad currency choice for international
investors.. Single choice.

(2/2 Points)
euro commercial paper
euro certificate of deposits
syndicated euro loans
euronotes
5.Kathy borrows $10,000 from the bank. For a four year loan, the bank requires
annual end of year payments of $3,223.73. The annual interest rate on the loan is.
Single choice.
(3/3 Points)
10 percent
11 percent
9 percent
 12 percent
6.A preference that describes the extent to which a person is willing to give-up
the satisfaction obtained from present consumption in return for increased
consumption in the future.. Single choice.

(2/2 Points)
liquidity preference
time preference
market segmentation preference
rate of return preference
7.Eurocurrency assets of financial institutions include all the following except,.
Single choice.

(2/2 Points)
euro certificate of deposit
euronotes
syndicated euroloans
euro commercial paper
8.The percentage difference between the initial market value of an asset and the
purchase price paid for that assets at the start of the REPO, or the amount that
can be used as collateral for a loan. Single choice.

(2/2 Points)
discount
add on rate
premium
haircut
9.The annualized yield on treasury bills is calculated in this formula. Single choice.

(2/2 Points)
P=PAR x(1-(d x n/360)
Y=PAR x(1-(d x n/360)
Y=(PAR-P)/P x (365/n)
 P=(PAR-P)/P x (365/n)
10.These are funds borrowed and lent in an economy during a specified period of
time.. Single choice.

(2/2 Points)
loanable fund
investment fund
deposit fund
saving fund
11.It is a phenomenon that may occur in an auction, where the lower bidder wins
acceptance of the tender, but pays a price which is higher than that of other
lower bidders.. Single choice.

(2/2 Points)
winner's curse
uniform price auction
discriminatory price auction
dutch auction
12.The difference between the nominal rate of interest and the expected rate of
inflation. Single choice.

(2/2 Points)
real interest rate
effective interest rate
nominal interest rate
compound interest rate
13.The compensation paid by the borrower of funds to the lender. Single choice.

(2/2 Points)
interest rate
rate of return
premium
yield
14.A local brokerage firm is offering a zero coupon certificate of deposit for
$10,000. At maturity, three years from now, the investor will receive $14,000.
What is the rate of return on this investment?. Single choice.

(0/3 Points)
12 percent
11 percent
14 percent
13 percent
15.The economist who created an economic theory that describe the relationship
between inflation and both real and nominal interest rates. Single choice.

(2/2 Points)
Knut wicksell
John Maxwell
Irving fisher
Warren Buffet
16.An economist who believes that the level of interest is determined by the
supply and demand of loanable funds available in an economy's credit market.
Single choice.

(0/2 Points)
Milton Friedman
Karl Max
Knutt Wicksell
Irving fisher
17.Which of the following is an example of a capital market instrument. Single
choice.

(2/2 Points)
commercial paper
preferred stock
U.S treasury bills
 bankers acceptance
18.The chance of financial loss or more formally, the variability of return
associated with a given asset. Single choice.

(2/2 Points)
risk
return
yield
cost
19.The attitude toward risk in which an increased in return would be required for
an increase in risk. Single choice.
(0/2 Points)
risk-free
risk averse
risk seeker
risk neutral
20.Ana has a P10 today to buy candies costing P.25. if she will invest her P10 to a
savings bank on a one -year deposit with the current nominal interest rate of 7%
and the expected rate of inflation over the coming year is 4%, how many candies
she would be able to buy at the end of the year?. Single choice.

(0/3 Points)
42 pcs of candies
41.2 pcs of candies
40 pcs of candies
41.5 pcs of candies
21.A graph of relationship between the debt's remaining time to maturity and its
yield to maturity. Single choice.

(2/2 Points)
inflation curve
yield curve
interest rate curve
 rate of return curve
22.Theory stating the interest rates for short term and long-term fund are viewed
separately and not related with each other. Single choice.

(2/2 Points)
market segmentation theory
liquidity premium theory
expectation theory
preferred habital theory
23.It is an addition to interest rate demanded by a lender to take into account the
risk that the barrower might default on the loan or may not repay on time.. Single
choice.

(2/2 Points)
risk premium
interest rate premium
return premium
yield
24.You recently sold 100 shares of Microsoft stock to your brother at a family
reunion. At the reunion your brother gave you a check for the stock and you gave
your brother the stock certificates. Which of the following best describes this
transaction?. Single choice.

(2/2 Points)
This is an example of a derivative market transaction.
This is an example of a direct transfer of capital
This is an example of an exchange of physical asset.
This is an example of a money market transaction
25.When the amount earned on a deposit has become part of the principal at the
end of a specified time period the concept is called. Single choice.

(0/2 Points)
discount interest
 compound interest
primary interest
future value
26.The yield curve that indicates short-term borrowing cost are cheaper than
long-term borrowing cost. Single choice.

(0/2 Points)
flat yield curve
downward sloping yield curve
normal yield curve
inverted yield curve
27.The rate of interest agreed upon contractually charged by a lender or
promised by a borrower is the _________ interest rate.. Single choice.

(2/2 Points)
continous
nominal
effective
discounted
28.It states that the real interest rate equals the nominal interest rate minus the
expected inflation rate. Single choice.

(2/2 Points)
Maxwell effect
Friedman effect
Fisher effect
karl Max effect
29.As the interest rate increases for any given period, the future value interest
factor will. Single choice.

(2/2 Points)
move toward 1.
increase
 remain unchanged
decrease
30.You recently sold 200 shares of Disney stock, and the transfer was made
through a broker. This is an example of. Single choice.

(2/2 Points)
. A primary market transaction.
A futures market transaction.
An over-the-counter market transaction.
A secondary market transaction.
A money market transaction.
31.The future value of 100 received today and deposited at 6 percent for four
years is. Single choice.

(3/3 Points)
124
126
116
79
32.A REPO agreement with no set maturity date, but renewed each day upon
agreement of both counterparties. Single choice.

(2/2 Points)
open REPO
reverse REPO
term REPO
haircut
33.Cara establishes a seven year, 8 percent loan with a bank requiring annual end
of year payments of P960.43. Calculate the original principal amount.. Single
choice.

(3/3 Points)
5000
 6000
5750
5500
34.General preferences of investors for short-term securities. Single choice.

(2/2 Points)
liquidity preference
loanable fund theory
market segment theory
expectation theory
35.It is an auction , in which each bidder pays the bid price. and it is characterized
by a tail and a cover. Single choice.

(2/2 Points)
discriminatory price auction
winner's curse
dutch auction
uniform price auction
36.These are short-term money market instrument issued by the government and
they are in effect zero-coupon instrument and are issued at a discount to their
par or nominal value.at which price they are redeemed.. Single choice.

(0/2 Points)
certificate of deposits
commercial papers
treasury bills
interbank short term loan
Option 5
37.What is the highest effective rate attainable with a 12 percent nominal rate?.
Single choice.

(3/3 Points)
12%
 12.75%
12.55%
12.95%
38.The top level foreign exchange market where banks exchange different
currencies, by either deal with one directly of thru electronic platform. Single
choice.

(2/2 Points)
derivatives market
offshore bank market
european central bank market
interbank market
39.LIBOR means. Single choice.

(2/2 Points)
Liberated interbank offered rate
London interbank offered rate
Liberated integrated banks offered rate
Loans integrated banks offered rate
40.A yield curve that reflects relatively similar borrowing costs for both short and
long term borrowing cost. Single choice.

(0/2 Points)
inverted yield curve
flat yield curve
upward sloping yield curve
normal yield curve
41.These are unsecured and negotiable money market instrument issued by
highly rated corporation to raise short-term funds for meeting working capital
needs directly from the market instead from borrowing from the banks. Single
choice.

(0/2 Points)
 treasury notes
treasury bills
commercial papers
certificate of deposits
42.The type of savings account usually issued by commercial banks, which
restricts the access to the money invested, but offers much higher interest rates
than those associated with regular savings accounts.. Single choice.

(0/2 Points)
current deposit
certificate of deposit
REPO
euro currency savings account
43.The rate of interest actually paid or earned, also called the annual percentage
rate (APR), is the _________ interest rate.. Single choice.

(2/2 Points)
effective
nominal
discounted
continous
44.Assume you have a choice between two savings deposit accounts. Account A
has an annual percentage rate of 7.55 percent but with interest compounded
monthly. Account B has an annual percentage rate of 7.45 percent with interest
compounded continuously. Which account provides the highest effective annual
return?. Single choice.

(3/3 Points)
Account A
Account B
Both provide the same effective annual return.
We don’t have sufficient information to make a choice
45.It is the benchmark rate of the large unsecured euro market for maturities
longer than overnight .. Single choice.

(2/2 Points)
EURIBOR
LIBOR
EONIA
EUREPO
46.The yield curve based on zero coupon bond is called. Single choice.

(0/2 Points)
normal yield curve
coupon bond yield curve
spot yield curve
forward yield curve