RJDAMA CHRISTIAN ACADEMY INC.

San Jose, Gonzaga, Cagayan

S.Y. 2021-2022

BUSINESS FINANCE
(ABM 12)

2nd SUMMATIVE TEST

Name: SCORE:

I. MULTIPLE CHOICE
Direction: Encircle the correct answer.
1. Money placed into a banking institution for safekeeping.
a. Bank account b. Bank deposit c. Savings account
2. Debt investments where an investor loans money to an entity which borrows the funds for
a defined period of time at a variable or commonly, fixed interest rate.
a. Bonds b. Loan c. Interest
3. The interest in the first compounding period is added on the principal, which will then be
the basis for the interest to be computed for the next period.
a. Compound interest b. Simple interest c. Bank interest
4. The number of times interest is computed on a certain principal in one year.
a. Present value b. Single amount c. Compounding frequency
5. An investment that is made up of a pool of funds collected from many investors for the
purposes of investing in stocks, bonds, and similar assets.
a. Unit Investment Trust Fund b. Trust Fund c. Mutual Fund
6. A basic good used in commerce that is interchangeable with other commodities of the
same type (example; gold, oil)
a. Commodities b. Real estate c. Currencies
7. General increase in prices.
a. Hedge b. Inflation c. Liquidity
8. A scenario when a single cash outflow is made and the total receipts will be at a single
future date. 
a. Single amount b. Lump sum c. Annuity
9. It is the process of evaluating and selecting long-term investments that are consistent with
the firm’s goal of maximizing owners’ wealth.
a. Long-term investment b. Capital Budgeting c. financial budgeting
10. An asset or item acquired with the goal of generating income or appreciation.
a. Investment b. financial c. Unit Investment Trust Fund

II. TRUE OR FALSE

Direction: Write T if the statement is correct and F if it is not. Write your
answer on the blank.
_______ 1. The debtor must invest within his means.
_______ 2. The margin trading allows clients to trade more than their capital. It can magnify
both earnings and losses.
_______ 3. Real estate are the land and any improvements on it” (i.e., land, house and lot,
condominiums).
_______ 4. Mutual funds are debt investments where an investor loans money to an entity which
borrows the funds for a defined period of time at a variable or commonly, fixed interest rate.
_______ 5. Savings account earns interest but not that significant, but the most common among
individuals.
_______ 6. Short-term loan is a loan with scheduled periodic payments that consists of both
principal and interest.
_______ 7.  Ordinary annuity is a cash flow occurs at the beginning of each period.
_______ 8. Simple interest is interest in the first compounding period is added on the principal,
which will then be the basis for the interest to be computed for the next period.
_______ 9. Stocks are type of security that signifies ownership in a corporation and represents a
claim on part of the corporation’s assets and earning.
_______ 10. Investment opportunities should be grabbed only when you have extra resources.
 III. MATCHING TYPE
Direction: Match the advantage and disadvantage in column A with the different
types of investments in column B by writing the capital letter on the blank.
COLUMN A COLUMN B
________ 1. Riskiest of all assets (can lose even more than a. Unit Investment
50% of their money in one day) Trust Fund
________ 2. No shareholder rights for investors such as b. Insurance
dividends and voting rights. c. Bonds
________ 3. Known income based on outstanding principal d. Stocks
and current interest rate. e. Bank Deposits
________ 4. Largest market in the world in terms of trading f. Currencies
volume, so much liquidity.
________ 5. On some of traditional insurance plans, no
sickness/death until a certain age may mean not getting any
benefits at all (that’s why VUL’s are now very prevalent).

IV. JUMBLED WORDS

Directions: Arrange the jumbled letters to find the hidden word describe in each
number below. Write your answer on the blank.
1. T A E D B I S N O K P (2 words)
2. I E D S I D N D V
3. D E H G E
4. L V U
5. V E T T N I E M N S
6. M I S I M C O D O T E
7. F D T U S U A N U L M (2 words)
8. I T E I S S P E M L N R E T (2 words)
9. N U Y A N I T
10. O G N M I R N O T I

1. Money placed into a banking institution for safekeeping.

2. Distribution of the company’s income to its shareholders.

3. Investment that reduces the risk of adverse price movement in an asset.

4. Variable Universal Life Insurance or a life insurance that offers both death benefit and
 investment features.
5. An asset or item acquired with the goal of generating income or appreciation.

6. A basic good used in commerce that is interchangeable with other commodities of the
same type.
7. An investment that is made up of a pool of funds collected from many investors for the
purposes of investing in stocks, bonds, and similar assets.

8. The charging interest rate r based on a principal P over T number of years.

9. A periodic stream of equal cash flow at equal time intervals (annually, monthly, etc.).

10. Results are monitored and actual cost and benefits are compared with those that were
expected.

V. ESSAY
Direction: Read the passage carefully and plan what you will say. Write your
answer at the back or use yellow paper.

Based in your own understanding, explain why investments require additional risk-
taking.

“For with God, nothing is impossible” – Luke 1:37

Prepared by:

ALMA ANGELIE D. AGRESOR

Business Finance Instructor