Financial management -QUIZ (1)

TRUE OR FALSE
1. Budgeting involves monitoring expenses to ensure e icient use of financial resources.
(True)

2. Capital budgeting decisions only focus on short-term returns. (False - capital budgeting
evaluates long-term return projects

3. Purchasing insurance coverage is an example of risk management. (True)

4. Risk management ensures the irm has enough cash to meet its day-to-day obligations while
maintaining an optimal cash balance. (False -Cash flow management)

5. Risk management involves identifying financial risks and implementing strategies to

eliminate them (False -to mitigate them)

6. The financial environment influences how financial institutions and markets operate. (True)

7. Value maximization involves maximizing the firm's value for its stakeholders, not just its
shareholders. ( False - for its shareholders)

8. Liquidity management is important for meeting long-term financial obligations. (False -

short-term financial obligations)

MCQ
1. What is the primary goal of financial management?
(a) Maximizing shareholder wealth (b) Minimizing financial risk
(c) Ensuring compliance with financial regulations (d) None of the above

2. What is the key responsibility of a financial manager?

a) Marketing the firm's products b) Managing employee payroll
c) Creating the firm's budget d) Making sales forecasts

3. Capital budgeting decisions evaluate:

a) Long-term investments and asset purchases b) Daily cash flow needs
c) Expense allocations for the upcoming month d) Sta ing requirements

4. What is the primary goal of value maximization?

(a) To increase the firm's market share (b) To maximize shareholder returns

(c) To reduce the firm's debt (d) To improve employee morale

 5. What is the primary role of financial institutions?
(a) To provide financial services (b) To regulate the financial system
(c) To set interest rates (d) To manage the economy

6-What is the purpose of the legal and regulatory framework in the financial environment?

(a) To protect investors (b) To promote stability and transparency

(c) To prevent financial crises (d) All of the above

7. Which financial market enables investors to buy and sell shares of publicly traded
companies?

(a) Stock Market (b) Bond Market

(c) Foreign Exchange Market (d) Commodity Market

8. What is the primary function of the bond market?

(a) Buying and selling commodities (b) Allowing individuals to exchange currencies

(c) Providing a means for governments and corporations to raise capital

(d) Facilitating the trading of stocks

9. Which market allows individuals and businesses to exchange one currency for another?

(a) Stock Market (b) Bond Market

(c) Foreign Exchange Market (d) Commodity Market

10. What is the purpose of commodity markets?

(a) Buying and selling stocks (b) Managing price risks for raw materials

(c) Exchanging currencies (d) Raising capital for governments