Department of Education

Region X – Northern Mindanao

Division of Bukidnon
District of Cabanglasan I
CABULOHAN – PARADISE NATIONAL HIGH SCHOOL – ANNEX
Poblacion, Cabanglasan, Bukidnon

BUSINESS FINANCE

Name:___________________________________________________________________Score: _____________________________

Grade & Section: ___________________________________________Date:______________________________________________

Multiple Choice: Choose the best answer that corresponds to the question. Write the letter on the space provide.
Any ERASURES will invalidate your answer.
______1. A ______ is one financial intermediary handling individual savings. It receives premium payments that are placed in
loans or investments to accumulate funds to cover future benefits.
A. life insurance company C. commercial bank
B. savings bank D. credit union
______2. The key participants in financial transactions are individuals, businesses, and governments. Individuals are net
______ of funds, and businesses are net ______ of funds.
A. suppliers; users C. users; supplie
B. purchasers; sellers D. users; providers
______3. Which of the following is not a financial institution.
A. A pension fund C. A commercial bank
B. A newspaper publisher D. An insurance company
______4. A ______ is set up so that employees of corporations or governments can receive income after retirement.
A. life insurance company C. savings bank
B. pension fund D. credit union
______5. A ______ is a type of financial intermediary that pools savings of individuals and makes them available to business
and government users. Funds are obtained through the sale of shares.
A. mutual fund C. savings bank
B. savings and loans D. credit union
______6. Most businesses raise money by selling their securities in a.
A. A direct placement. C. A public offering.
B. A stock exchange. D. A private placement.
______7. Which of the following is not a service provided by financial institutions?
A. Buying the businesses of customers. C. Paying savers’ interest on deposited funds.
B. Investing customers’ savings in stocks and bonds. D. Lending money to customers.
______8. Government usually
A. Borrows funds directly from financial institutions. C. Is a net supplier of funds.
B. Maintains permanent deposits with financial institutions. D. Is a net demander of funds.
______9. By definition, the money market involves the buying and selling of
A. Funds that mature in more than one year. C. Stocks and bonds.
B. Flows of funds. D. Short-term funds.
______10. The ______ is created by a financial relationship between suppliers and users of short-term funds.
A. financial market C. stock market
B. money market D. capital market.
 ______11. Firms that require funds from external sources can obtain them from
A. Financial markets. C. Financial institutions.
B. Private placement. D. All of the above.
______12. The major securities traded in the capital markets are
A. Stocks and Bonds. C. Commercial Paper and Treasury bills.
B. Bonds and Commercial Paper. D. Treasury bills and certificates of deposit.
______13. Long-term debt instruments used by both government and business are known as
A. Bonds C. Stocks
B. Equities D. Bills

TRUE or FALSE: Read each statement carefully. Write TRUE on the line if you think a statement it is true, otherwise write FALSE.
Any ERASURES will invalidate your answer.

_____1. Primary and secondary markets are markets for short-term and long-term securities, respectively.
_____2. Financial markets are intermediaries that channel the savings of individuals, businesses, and government into loans or
investments.
_____3. The money market involves trading of securities with maturities of one year or less while the capital market involves the
buying and selling of securities with maturities of more than one year.
_____4. Holders of equity have claims on both income and assets that are secondary to the claims of creditors.
_____5. Preferred stock is a special form of stock having a fixed periodic dividend that must be paid prior to payment of any
interest to outstanding bonds.
_____6. Commercial banks obtain most of their funds from borrowing in the capital markets.
_____7. Credit unions are the largest type of financial intermediary handling individual savings.
_____8. 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.
_____9. IPO stands for Interest and Principal Obligation.
 ANSWER KEY
Multiple Choice
1. A
2. A
3. B
4. B
5. A
6. C
7. A
8. D
9. D
10. B
11. D
12. A
13. A

True/False
1. F
2. F
3. T
4. T
5. F
6. F
7. F
8. T
9. F