Business Finance

Grade 12 - ABM St. Anthony Gonzales S.Y. 2023-2024

Quiz #1

A. Write T if the statement is True and F if the statement is False.

1. High cash flow is generally associated with a higher share price whereas higher risk tends to
result in a lower share price.
2. The wealth of corporate owners has measured by the share price of the stock.
3. When considering each financial decision alternative or possible action in terms of its impact
on the share price of the firm's stock, financial managers should accept only those actions
that expected to maximize shareholder value.
4. Stockholders expect to earn higher rates of return on investments of lower risk and lower
rates of return on investments of higher risk.
5. Financial markets are intermediaries that channel the savings of individuals, businesses, and
government into loans or investments.
6. Commercial banks obtain most of their funds from borrowing in the capital markets.
7. 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 for more than one
year.
8. Primary and secondary markets are markets for short-term and long-term securities,
respectively.
9. 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.
10. Credit unions are the largest type of financial intermediary handling individual savings.

B. In your own words, summarize the roles of the individuals/positions involved in the decision-making
process of the company. This is based on our organizational structure.

C. In your own words, write three examples of each and describe it briefly.

a. Financial Institution
b. Financial Instrument
c. Financial Market

D. Essay. If you were to be the Financial Manager of a start-up restaurant, what best practices will you
provide to ensure the business’ success.