Republic of the Philippines

Department of Education
DIVISION OF CITY SCHOOLS, CITY OF NAGA
DON EMILIO CANONIGO SENIOR HIGH SCHOOL
PANGDAN, CITY OF NAGA, CEBU
School ID: 303002

WEEK 2 TEST QUESTIONAIRE FOR BUSINESS FINANCE

Test Question ( Multiple-Choice) Level No. of
points
DIRECTION: Read each item carefully and write the letter of your chosen answer. Easy (40% or Average Difficult Answer
4 pts.) (10 pts.)
30% or 3 (30% or
pts.) 3 pts.)

1. How can a financial intermediary institution help in the intermediation market? 1 D

a. buys primary securities and sell secondary securities
b. borrows short and lend long for the benefits its clients and its business.
c. borrows in small denominations and lend in large
d. buy from brokers and dealers and sell to the public

2. If bad credit risks are those that most actively seek and receive loans from 1 A
financial intermediaries, what problem does this cause the financial
intermediaries to face?
a. Moral hazard b. Adverse selection c. Free-riding d. Costly state
verification

3. According to the accounting profession, which of the following would be 1 D

considered a cash-flow item from an "investing" activity?
a. cash inflow from interest income.
b. cash inflow from dividend income.
c. cash outflow to acquire fixed assets.
d. all of the above.
 Republic of the Philippines
Department of Education
DIVISION OF CITY SCHOOLS, CITY OF NAGA
DON EMILIO CANONIGO SENIOR HIGH SCHOOL
PANGDAN, CITY OF NAGA, CEBU
School ID: 303002

4. If the following are balance sheet changes: 1 A

₱ 5,005 decrease in accounts receivable
₱ 7,000 decrease in cash
₱ 12,012 decrease in notes payable
₱10,001 increase in accounts payable
a "use" of funds would be the:
a.₱ 7,000 decrease in cash.
b. ₱ 5,005 decrease in accounts receivable.
c. ₱ 10,001 increase in accounts payable.
d. ₱ 12,012 decrease in notes payable.

5. As opposed to most other debt instruments, mortgage loans tend to 1 C

a. charge lower interest rates c. pay interest less frequently
b. be of larger denomination d. be repaid over the life of the loan

6. On an accounting statement of cash flows an "increase(decrease) in cash and 1 A

cash equivalents" appears as
a. a cash flow from operating activities.
b. a cash flow from investing activities.
c. a cash flow from financing activities.
d. none of the above.

7. Which of the following would be included in a cash budget? 1 B

a. depreciation charges. c. goodwill.
 Republic of the Philippines
Department of Education
DIVISION OF CITY SCHOOLS, CITY OF NAGA
DON EMILIO CANONIGO SENIOR HIGH SCHOOL
PANGDAN, CITY OF NAGA, CEBU
School ID: 303002

b. dividends. d. patent amortization

8. What is the primary function of large, diversified brokerage firms in the money 1 C
market?
a. To sell money market securities to the Federal Reserve for its open market
operations
b. To buy money market securities from corporations that need liquidity
c. To make a market for money market securities by maintaining an inventory
from which to
buy or sell
d. To buy T-bills from the U. S. Treasury Department

9. How can a bank be called solvent? 1 D

a. has enough capital to pay off depositors
b. has mostly good loans
c. does not experience a run on its deposits
d. is able to meet all demands by depositors for payment

10 Which of the following is NOT a cash outflow for the firm? 1 B

a. depreciation.
b. dividends.
c. interest payments.
d. taxes.

Prepared by:
 Republic of the Philippines
Department of Education
DIVISION OF CITY SCHOOLS, CITY OF NAGA
DON EMILIO CANONIGO SENIOR HIGH SCHOOL
PANGDAN, CITY OF NAGA, CEBU
School ID: 303002

MARIZ B. AÑIRO
Teacher II Checked by:

PATRICIO M. MANUNDAN
School Head