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FINMAN > QUIZ1 > Flashcards

QUIZ1 Flashcards

1
Q

The capital required for day-to-day operations of the business is called
a. Current Assets
b. Equity
c. Working Capital
d. Cost of Capital

A

c. Working Capital

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2
Q

Ethical behavior is doing the right thing
a. Axiom 3
b. Axiom 5
c. Axiom 8
d. Axiom 10

A

d. Axiom 10

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3
Q

In a typical loan amortization schedule, the total peso amount of money paid each period ______
a. Increase w/ each payment
b. Decrease w/ each payment
c. Remains Constant
d. Sorry

A

c. Remains Constant

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4
Q

High profits attract high competitions
a. Axiom 3
b. Axiom 4
c. Axiom 5
d. Axiom 6

A

c. Axiom 5

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5
Q

______ maximization objectives fail to recognize quality of benefits such as risk factor
a. value
b. wealth
c. profit
d. both A and B

A

c. profit

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6
Q

The method used in the computing for the future value is
a. discounting
b. compounding
c. inverse compounding
d. none of these

A

b. compounding

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7
Q

The process of financing assets of a business is known as:
a. asset structure
b. owners structure
c. financial structure
d. capital structure

A

d. capital structure

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8
Q

Financial management process deals with
a. investments
b. financing decisions
c. profit maximization
d. more assets

A

b. financing decisions

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9
Q

Financial management is the _______ activity of a business
a. operational
b. marketing
c. HR management
d. capital structure

A

a. operational

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10
Q

The market price of an equity share is determined by the
a. President of the Comp
b. BOD/BOT
c. Buyers and Sellers of Shares
d. SEC

A

c. Buyers and Sellers of Shares

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11
Q

In 3 years you are to receive PHP 5,000. If the interest rate were to suddenly increase, the present value of that future amount to you would
a. Fall
b. Rise
c. Remain unchanged
d. Cannot be determined

A

a. Fall

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12
Q

Which of the following are taken by the financial manager?
a. Marketing decisions
b. Dividend decisions
c. HR decisions
d. All of the following

A

b. Dividend decisions

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13
Q

To increase a given present value, the discount rate should be adjusted
a. Upward
b. Downward
c. True
d. I don’t know

A

b. Downward

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14
Q

(1+i)^n
a. PVIF
b. FVIF
c. PVIFA
d. FVIFA

A

b. FVIF

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15
Q

You can use _____ to roughly estimate how many years a given sum of money must earn at a given compound annual interest rate in order to double that initial amount
a. Rule 415
b. Rule of 72
c. Rule of 78
d. Rule of 144

A

b. Rule of 72

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16
Q

In a typical loan amortization schedule, the peso amount of interest paid each period _____
a. Increase w/ each payment
b. Decrease w/ each payment
c. Remains Constant
d. Sorry

A

b. Decrease w/ each payment

17
Q

In which type of business, more investment in the fixed asset is required
a. Manufacturing
b. Trading
c. Both A and B
d. None of these

A

a. Manufacturing

18
Q

Financial planning provides a link between
a. Investment, Dividend
b. Financing, Dividend
c. Investment, Financing
d. Investment, Working C

A

c. Investment, Financing

19
Q

The primary goal of financial management is to maximize
a. The return
b. The risk
c. Wealth of Owners
d. Profit

A

c. Wealth of Owners

20
Q

Higher working capital usually results in
a. Higher current ratio
b. Higher risk
c. Higher profit
d. All of the following

A

d. All of the following

21
Q

A company uses labor intensive technique need _____ fixed capital, while a company using capital intensive technique require _____ fixed capital
a. No, Less
b. Less, More
c. More, Less
d. No, More

A

b. Less, More

22
Q

The time value of money ______ over time according to Axiom 2
a. Decreases
b. Increases
c. Remains the same

A

a. Decreases

23
Q

Shareholder’s wealth is represented by the
a. Cash in the bank
b. Market Price of a Share
c. Book value of asset
d. None of the following

A

b. Market Price of a Share

24
Q

You want to save money in a bank with the expectation of receiving PHP 50,000 in 5 years. One bank has proposed a monthly compounding rate of 9.5%. How much money do you need to deposit in the bank today?
a. PHP 31, 761.38
b. PHP 78, 711.94
c. PHP 70, 250. 47
d. PHP 31, 152.64

A

d. PHP 31, 152.64

25
Q

With continuous compounding at 10% for 30 years, the future value of an initial investment of PHP 2,000 is closest to
A. PHP 34, 898
B. PHP 40, 171
C. PHP 164, 500
D. PHP 328, 282

A

A. PHP 34, 898

26
Q

Assume that the interest rate is greater than zero. Which of the following cash-inflow streams should you prefer?
a. PHP 400, 300, 200, 100
b. PHP 100, 200, 300, 400
c. PHP 250, 250, 250, 250
d. Any of the Choices

A

a. PHP 400, 300, 200, 100

27
Q

You are considering investing a zero-coupon bond that sells for PHP 250. At maturity in 16 years it will be redeemed for PHP 1,000. What approximate annual rate growth does this represent ?
a. 8%
b. 9%
c. 12%
d. 25%

A

b. 9%

28
Q

You are considering borrowing PHP 10,000 for 3 years at an annual interest rate of 6%. The loan agreement calls for 3 equal payments, to be paid at the end of each of the next 3 years. (Payments include both principal and interest.) The annual payment that will fully pay off (amortize) the loan is closest to
a. PHP 2, 674
b. PHP 2, 890
c. PHP 3, 714
d. PHP 4, 020

A

c. PHP 3, 714

29
Q

Borrowing at 10% and the tax rate is at 30% means the after-tax cost of debt is
A. 20%
B.7%
C. 3%
D. 10%

A

B.7%

30
Q

Company 1 issues a bond with a principal of PHP 15,000, an interest rate of 5% annually with maturity in 5 years and a discount rate of 8%.
A.PHP 13,203.28
B. PHP 2,994.53
C. PHP 22,039.92
D. PHP 16,948.26

A

A.PHP 13,203.28

31
Q

A client has been investing PHP 20,000 at the beginning of every six months for the past 3 years in a fund that has 10 averaged 10% compounded semi-annual. How much money does the client have in his account now?
A. PHP 101,513.84
B. PHP 106,589.53
C. PHP 49,737.04
D. PHP 54,464.96
E.PHP 130,000.00

A

E.PHP 130,000.00

32
Q

On July 1, year 1, James Rago signed an agreement to operate as a franchisee of Fast foods, Inc. for an initial franchise fee of PHP 60,000. Of this amount, PHP 20,000 was paid when the agreemerlt was signed and the balance is payable in four equal annual payments of PHP 10,000 beginning July 1, year 2. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. Rago’s credit rating indicates that he can borrow money at 14% for a loan of this type. Information on present and future value factors is as follows:

*Present value of $1 at 14% for four periods 0.59
*Future amount of $1 at 14% for four periods 1.69
*Present value of an ordinary annuity of $1 at 14% for four periods 2.91
Rago should record the acquisition cost of the franchise on July 1, year 1 at

A. PHP 43,600
B.PHP 49,100
C. PHP 60,000
D. PHP 67,600

A

B.PHP 49,100

33
Q

Suppose that you have PHP14,000 and that you deposit this in a savings account earning 3% annually for a period of five years. You will naturally be interested in knowing how much money you will have in your account at the end of this five-year time period

A. PHP 12, 076.52
B. PHP 12, 438.42
C. PHP 15, 757. 12
D. PHP 16, 229.84

A

D. PHP 16, 229.84

34
Q

You want to buy an ordinary annuity that will pay you PHP 4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to

A. PHP 32,000
B. PHP 39,272
C. PHP 40,000
D. PHP 80,000

A

B. PHP 39,272

35
Q

For PHP 1,000 you can purchase a 5-year ordinary annuity that will pay you a yearly payment of PHP 263.80 for 5 years. The compound annual interest rate implied by this arrangement is closest to

A. 8%
B. 9%
C. 10%
D. 11%

A

C. 10%

FINMAN (8 decks)

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