THIRD QUARTER EXAMINATION

BUSINESS FINANCE 12
REVIEWER
- Lalisa Manoban is part of the top management of Blackpink Corp. She takes care of all the important financial functions
of an organization. What role does she manifest?
a. Role of a VP for Marketing c. Role of a VP for Production
b. Role of a VP for Administration d. Role of a VP for Finance
- What type of depository institutions accept deposits from the public and offer security to their customers?
a. Saving Banks b. Credit Unions c. Commercial Banks d. Saving and Loan Association
- What type of depository institutions perform the function of accepting the savings from the individuals and lending to
the other consumers?
a. Saving Banks b. Credit Unions c. Commercial Banks d. Saving and Loan Association
- What do you call the companies in the financial sector that provide a broad range of business and services including
banking, insurance, and investment management?
a. financial markets b. financial instruments c. financial services d. financial institutions
- Analyze the following statements about direct financing and indirect financing.
I. Borrowers from direct financing borrow funds directly from the financial market; borrowers from indirect
financing borrow funds from the financial market through a financial intermediary
II. Borrowers from indirect financing borrow funds from the financial market without using a third party; while
borrowers from direct financing borrow funds from the financial market through a financial intermediary
a. Statements I and II are FALSE c. Only Statement I is TRUE
b. Statements I and II are TRUE d. Only Statement II is TRUE
- We have a ₱100,000 bond with a stated rate of 10% and effective rate (required rate of return) of 12%,
that pays interest semi-annually and has a maturity of 3 years. At what price should the bond be issued?
a. ₱ 70,496.05 b. ₱ 95,082.67 c. ₱ 65,083.90 d. ₱ 24,568.62
- Which of the following refers to a way of evaluating and selecting long-term investments that are in line with the firm’s
goal of maximizing owners’ wealth?
a. capital budgeting b. capital rationing c. payback method d. relevant cash flows
- The following are steps in capital budgeting, except:
a. investment proposal b. review and analysis c. decision making d. ranking approaches
- Which of the following refers to the concept that the level of return to be earned from an investment should increase as
the level of risk increases?
a. capital rationing c. risk and return trade-off
b. payback method d. internal rate of return
- Which of the following is the management of money and includes activities such as investing, lending, borrowing,
budgeting, saving and forecasting?
a. finance b. financial management c. financial instrument d. financial asset
- Which of the following is a process of assessing the capital required, defining its composition and the process of setting
up financial policies regarding purchasing, administration, and investment of funds of any business?
a. Plan b. Planning c. Contingency Plan d. Financial Planning
- Which of the following is a systematic way of deciding about and doing things in a purposeful manner?
a. Plan b. Planning c. Contingency Plan d. Financial Planning
- Which step in the financial planning process when you establish targets that you want to achieve in the future?
a. Establish responsibility centers for accountability and timeliness c. Identify goal-related tasks
b. Establish the evaluation system for monitoring and controlling d. Set goals or objectives
- Why is financial planning important?
a. It reduces uncertainties with regards to changing market trends which can be faced easily through enough funds
b. It helps in making growth and expansion programs only for short-run survival of the company
c. It increases the uncertainties which can be a hindrance to growth of the company
d. Insufficient funds have to be ensured
- Which of the following is defined as a tool of the company to set an overall goal of what the company’s performance
and position will be for and as of the end of the year?
a. Projected Statement of Comprehensive Income c. Projected Financial Statements
b. Projected Statement of Financial Position d. Projected Statement of Cash Flows
- Which of the following is defined as a statement that incorporates current expectations to arrive at a financial picture that
management believes it can attain as of a future date?
a. Projected Statement of Comprehensive Income c. Projected Financial Statements
b. Projected Statement of Financial Position d. Projected Statement of Cash Flows
- Which of the following is defined as planning, organizing, directing and controlling the financial activities such as
procurement and utilization of funds of the enterprise. It means applying general management principles to financial
resources of the enterprise?
a. finance b. financial management c. financial instrument d. financial asset
- Who takes care of all the important financial functions of an organization?
 a. Chief Executive Officer b. VP for Finance c. VP for Marketing d. VP for Administration
- The following are among the responsibilities of VP for Marketing, except:
a. Formulating marketing strategies and plans c. Performing market and competitor analysis
b. Directing and coordinating company sales d. Approving company’s strategies, goals and budgets
- Jungkook is the Finance Manager of BTS Corp. He allocated funds in such a manner that they are optimally used. What
financial function does he practice?
a. Raising of Funds c. Profit Planning
b. Allocation of Funds d. Understanding Capital Markets

- Which of the following provides an estimate of the volume of goods and services that a company proposes to sell in a
future period?
a. Sales Budget b. Cash Budget c. Production Budget d. Projected Financial Statements
- Which of the following is useful for identifying future funding requirements or excess cash within a given period?
a. cash receipts b. cash budget c. cash disbursements d. sales budget
- What course of action should you make if your cash budget has a negative total?
a. If it is negative, it means that there is an excess cash which requires additional investment
b. If it is negative, it means that there is a shortage which requires additional cash
c. If it is negative, it means it means there is a surplus which requires a cumulative financing requirement
d. If it is negative, it means it means there is a shortage which requires a cumulative investment
- What are investment houses?
a. stock corporations engaged in the underwriting of securities of other corporations on a guaranteed basis
b. provide credit to small borrowers who are not qualified to obtain small loans from other financial institutions
c. organized for the purpose of extending credit facilities to consumers and to industrial, commercial, or agricultural
enterprises
d. organized jointly by private banks, the National Development Corporation and the Technology
Livelihood Research Center and/or other government agencies
- The time value of money suggests that a peso received today is worth _________a peso received in the future.
a. more than b. less than c. the same as d. less than or equal to
- What is the other term for the Time Value of Money (TMV)?
a. future value b. future interest value c. present discounted value d. present interest value
- What is your analysis of the given statements below?
Statement 1: Future value of money is the concept that money you have now is worth more than the
identical sum in the future due to its potential earning capacity.
Statement II: Present value is the value of a current asset at a future date based on an assumed rate of
growth.
a. Both Statements are true c. Only Statement II is true
b. Only Statement 1 is true d. Both Statements are false
- What is the future value of ₱ 2,000 compounded at a 10% annual interest at the end of one year?
a. ₱ 2,000.00 b. ₱ 2,100.00 c. ₱ 2,200.00 d. ₱ 2,300.00
- You invested ₱ 10,000.00 for 3 years at 9%. How much is the total proceeds to be collected from the
investment at the end of 3 years?
a. ₱ 2,950.29 b.₱ 2,952.29 c. ₱ 2,852.29 d. ₱ 2, 950.39
- Which of the following is defined as the paying off of debt with a fixed repayment schedule in regular installments over
a period of time?
a. interest b. nominal interest c. amortization d. annuities
- What are financing companies?
a. stock corporations engaged in the underwriting of securities of other corporations on a guaranteed basis
b. provide credit to small borrowers who are not qualified to obtain small loans from other financial institutions
c. organized for extending credit facilities to consumers and to industrial, commercial, or agricultural enterprises
d. organized jointly by private banks, the National Development Corporation and the Technology Livelihood Research
Center and/or other government agencies
- Banks usually request the following personal information in your loan application, except:
a. addresses b. ex-wife/husband/partner c. financial statements d. personal loan balances
- Which of the following is defined as the current value of a future sum of money or stream of cash flows given a
specified rate of return?
a. future value b. present value c. interest d. nominal interest
- Which of the following is defined as is the process of ensuring that customers pay their dues on time?
a. accounts receivable management c. credit management
b. inventory management d. cash disbursements
- Which of the following are goods and labor put into production but not yet finished?
a. goods in transit b. raw materials c. work in process d. finished goods
- What credit evaluation is used in the following example? J-Hope take out his BMW car for a personal loan.
a. character b. capacity c. condition d. collateral
- What are two components of an amortization payment?
a. Interest and Principal c. Payment amount and Principal
b. Interest and Payment Amount d. Percent and Interest
- What do you call the cost of borrowed money, usually expressed as a percentage?
a. Savings Plan b. Interest c. Scarce d. Purchase
- Which of the following is the correct order of the steps required under effective interest method?
I. Calculate the amortization amount by determining the difference of (1) and (2)
II. Calculate the bond interest paid (or accrued) by multiplying the face value of the bonds by the
contractual interest rate
III. Calculate the bond interest expense by multiplying the carrying amount of the bonds at the beginning
of the interest period by the effective interest rate
a. I, III, II b. III, I, II c. III, II, I d. I, II, III
- Which of the following statements is true about bond pricing?
I. When bonds are issued below the face or par value, they are said to be issued at a discount
II. When bonds are issued above par value, they are said to be issued at a premium
III. When bonds are issued below the face or par value, they are said to be issued at a premium
IV. A bond discount occurs when the required rate of return is greater than the nominal rate of return;
Bond premium occurs when the required rate (effective rate) is below the stated or nominal rate
a. Statements I, II, and III are true c. Statements I, III, and IV are true
b. Statements II, III, and IV are true d. Statements I, II, and IV are true
- What type of financial market offers opportunities for companies and the government to secure money to finance a
project or investment?
a. bond market b. stock market c. commodities market d. derivatives market
- Which of the following is classified as a financial asset?
a. Notes Payable b. Bonds Payable c. Notes Receivable d. bank account overdrafts
- Which of the following is classified as a financial liability?
a. Notes Receivable b. Investment in Stocks c. Cash Equivalents d. Bonds Payable