BUSINESS FINANCE

QUIZ no.1

Name: _____________________________ Date___________________

Section _____________________________ Score ___________________

I. MULTIPLE CHOICE
Direction: Choose the letter corresponding to the correct answer for each of the questions
provided below.
1. The role of the _______________________________ is to determine the appropriate capital structure
of the company.
a. VP for Marketing
b. VP for Finance of the Financial Manager
c. VP for Production
d. VP for Administration
2.___________________ is a tool to assess whether the investment will be profitable in the long run.
a. Capital budgeting analysis
b. Chief Financial Officer
c. Shareholders
d. Dividend policies
e. Short term investment
3. _______________________ include making decisions on how to fund long term investments (such as
company expansions) and working capital which deals with the day to day operations of the
company.
a. Sources of funds
b. Short term investment decisions
c. Issuance of new shares
d. Financing decisions
4. Capital structure refers to how much of your total assets is financed by debt and how much is
financed by equity.
a. Capital structure
b. Dividend Policies
c. Retained earnings for investment
d. Long term investment decisions
5. If we used the money from our borrowings, the asset bought is financed by ___________________.
a. Equity b. Raw material suppliers c. Debt d. Cash dividends
6. A ______________________is one financial intermediary handling individual savings and
receives premium payments that are placed in loans.
A. life insurance company B. commercial bank C. savings bank D. credit union
7. 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 B. purchasers; sellers C. users; suppliers D. users; providers
8. Which of the following is not a financial institution?
A. pension fund B. newspaper publisher C. commercial bank D. insurance company
9. A is set up so that employees of corporations or governments can receive income after
retirement.
A. life insurance company B. pension fund C. savings bank D. credit union
10. 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 B. savings and loans C. savings bank D. credit union
11. Most businesses raise money by selling their securities in a.
A. a direct placement. B. a stock exchange. C. a public offering. D. a private placement.
12. Which of the following is not a service provided by financial institutions?
A. Buying the businesses of customers
B. Investing customers’ savings in stocks and bonds
C. Paying savers’ interest on deposited funds
D. Lending money to customers
13. Government usually
A. borrows funds directly from financial institutions.
B. maintains permanent deposits with financial institutions.
C. is a net supplier of funds.
D. is a net demander of funds.
14. By definition, the money market involves the buying and selling of
A. funds that mature in more than one year.
B. flows of funds.
C. stocks and bonds.
D. short-term funds.
15. The _____________________ is created by a financial relationship between suppliers and
users of short-term funds.
A. financial market B. money market C. stock market D. capital market

II. Write what is being ask on the space provided before each number.

_____________________1. A business that is owned and operated by one individual.

_____________________2. A term that refers to two main activities the actual process of
attracting money and the management of these funds.
_____________________3. One of its disadvantages is strict reporting obligations.
_____________________4. The _________ ensures that production meets customer demands.
_____________________5._______ has priority over a common stock in terms of claims over the assets of a
company.
____________________6. A ________is one financial intermediary handling individual savings and
receives premium payments that are placed in loans.
____________________7. A business that owned and controlled by two or more persons who are
equally liable for losses.
____________________8. An_______ is any contract that evidences a residual interest in the assets of an
entity after deducting all liabilities.
____________________9. The _______ is the highest policy making body in a corporation.
____________________10. the process of estimating the capital required and determining it’s
composition
1. B.

2. A
3. D
4. A
5. C
1A 6. C 3. B 8. D 5. A 10. B
2 A 7. A 4. B 9. D

1. Sole proprietorship
2. Finance
3. Corporation
4. VP for production
5. Preffered stock
6. Commercialbanks
7. Partnership
8. Equity instrument
9. Board of directors
10. Financial planning