QUESTION 1: Finance is the study of how people and businesses… QUESTION 1: Finance is the study of how people and businesses evaluate investments and raise capital to fund them. a) TRUE b) FALSE QUESTION 2: Which statement is NOT true for corporation? a) Liability of owners is limited to invested funds b) Greater regulation c) Double taxation of dividends d) Not easier to raise Capital QUESTION 3: A market in which securities are bought and sold for the first time. The firm selling securities receives the money raised that they can then use to finance their businesses. a) Primary market b) Secondary market c) Non of above QUESTION 4: Revenues (or Sales) – Expenses = Profits a) TRUE b) FALSE QUESTION 5: Which accounts contain in the income statement? a) Revenues b) Gross Profit c) Net Income d) Income taxes e) All of above QUESTION 6: Please list four (4) financial stataments that the accounting and financial regulatory authorities mandate that firms must provide. 1 2 3 4 QUESTION 7: What is the FV of $20,000 compounded at 12% annually for 20 years? QUESTION 8: What is the present value of $200,000 to be received at the end of 25 years, given a 5% discount rate? QUESTION 9: Which one is the main advantages of Private Debt Placement a) Speed b) Reduced costs c) Financing flexibility d) All of above QUESTION 10: Types of Capital Investment Projects are 1 Revenue enhancing Investments 2 Cost-reducing investments 3 Mandatory investments a) TRUE b) FALSE QUESTION 11: Costs that have already been incurred, regardless of whether or not the investment is undertaken. These costs are not incremental cash flows resulting from acceptance of the investment because they will be incurred in any case. a) Sunk costs b) Overhead costs c) Non of above QUESTION 12: Incremental cash flow refers to the additional cash flow a firm receives from taking on a new project. a) TRUE b) FALSE QUESTION 13: Break-even analysis determines the minimum level of output or sales that the firm must achieve in order to avoid losing money – that is, to break even. In most cases, break-even sales is defined as the level of sales for which net operating income (NOI) equals zero. a) TRUE b) FALSE QUESTION 14: Which following statement is NOT true? a) Variable costs (or direct costs) are those costs that vary with firm sales b) As the number of units sold increases, fixed cost per unit decreases c) Fixed costs (or indirect costs) vary directly with sales revenue d) Variable costs per unit remain the same regardless of the level of output. QUESTION 15: firm pays cash directly to the shareholders. a) Cash dividend b) Share repurchase QUESTION 19: Income Statement: An income statement provides the following information for the firm over a specific period of time (usually a quarter of a year or a full year):a) TRUEb) FALSE QUESTION 20: Within the financial markets, there are three principal sets of players that interact:* Borrowers (individuals and businesses)* Savers (mostly individual investors)* Financial Institutions (Intermediaries) a) TRUEb) FALSE Accounting Business Financial Accounting EDU 200
