Mod 1

1. The role of the _______________________________ is to determine the appropriate capital structure of the
company.
A. VP for Marketing C. VP for Production
B. VP for Finance of the Financial Manager D. VP for Administration
2. ______________________________ is a tool to assess whether the investment will be profitable in the long
run.
A. Capital budgeting analysis C. Shareholders
B. Chief Financial Officer D. Dividend policies
3. A type of financial manager that directs the preparation of financial reports, summarizes and forecasts
the organization’s financial position.
A. Creditors B. Controllers C. Credit Managers D. Collectors
4. One of the financial intermediaries handling individual savings receives premium payments that
are placed in loans or investments to accumulate funds to cover future benefits.
A. life insurance company C. commercial bank
B. savings bank D. credit union
5. Which of the following term used in the creation and study of money?
A. Accounting B. Budgeting C. Finance D. Liquidation
6. Which of the following is the role of financial managers?
A. Ensures the financial health of an organization
B. Communicating with the investors
C. Prepare the place where to start a business
D. Monitor employees of the company
7. Where do firms that require funds from external sources that can obtain financial funds?
A. private placement C. financial institutions
B. financial markets D. All of the above
8. Which of the following is NOT an example of a financial institution?
A. Mutual Funds B. Corporate bonds C. Insurance companies D. Commercial Banks
9. _______________________ include making decisions on how to fund long term investments (such as
company expansions) and working capital which deals with the day to day operations of the company.
A. Sources of funds C. Issuance of new shares
B. Short term investment decisions D. Financing decisions
10. Capital structure refers to how much of your total assets is financed by debt and how much is financed by
equity.
A. Capital structure C. Retained earnings for investment
B. Dividend Policies D. Long term investment decisions
11. If we used the money from our borrowings, the asset bought is financed by _________________.
A. Equity B. Raw material suppliers C. Debt D. Asset

Mod 2
15. What term refers broadly to any marketplace where the trading of securities occurs?
A. Financial Instrument C. Financial Management
B. Financial Institution D. Financial Market
16. Which of the following terms greatly affects the financial market?
A. Economy B. Market C. Capital D. Technology
17. What level of money markets involved large volume trades between institutions and traders?
A. Retail level B. Wholesale level C. Critical level D. None of the above

1. The ___________ is created by a financial relationship between suppliers and users of short-term funds.
A. financial market C. Stock Market
B. money market D. capital market
2. Firms that require funds from external sources can obtain them from _________________.
A. financial market C. financial institutions
B. private placement. D. all of the above

3. The major securities traded in the capital markets are ________________.

A. stocks and bonds C. commercial paper and Treasury bills
B. bonds and commercial paper D. Treasury bills and certificates of deposit
4. The primary goal of the financial manager is ________________________
A. minimizing risk. C. maximizing wealth.
B. maximizing profit D. minimizing return

1. Corporate owners receive realizable return through

A. earnings per share and cash dividends. C. increase in share price and earnings per share.
B. increase in share price and cash dividends. D. profit and earnings per share.
2. The wealth of the owners of a corporation is represented by
A. profits. B. earnings per share. C. share value. D. cash flow.
3. Wealth maximization as the goal of the firm implies enhancing the wealth of
A. the Board of Directors. C. the federal government
B. the firm's employees D. the firm's stockholders
4. The goal of profit maximization would result in priority for
A. cash flows available to stockholders C. earnings per share.
B. risk of the investment D. timing of the returns
5. Profit maximization, as a goal, is not ideal because it does NOT consider
A. risk and cash flow. C. risk and EPS.
B. cash flow and stock price. D. EPS and stock price.

1. A ______________________is one financial intermediary handling individual savings and receives premium
payments that are placed in loans.
A. life insurance company B. commercial bank C. savings bank D. credit union
2. The key participants in financial transactions are individuals, businesses, and governments. Individuals are
net of funds, and businesses are net of funds.
A. suppliers; users B. purchasers; sellers C. users; suppliers D. users; providers
3. Which of the following is not a financial institution?
A. A pension fund C. A commercial bank
B. A newspaper publisher D. An insurance company
4. A is set up so that employees of corporations or governments can receive income after retirement.
A. life insurance company B. pension fund C. savings bank D. credit union
5. A is a type of financial intermediary that pools savings of individuals and makes them available to business
and government users. Funds are obtained through the sale of shares.
A. mutual fund B. savings and loans C. savings bank D. credit union
6. Most businesses raise money by selling their securities in a.
A. a direct placement. C. a public offering.
B. a stock exchange. D. a private placement.

7. Which of the following is not a service provided by financial institutions?

A. Buying the businesses of customers
B. Investing customers’ savings in stocks and bonds
C. Paying savers’ interest on deposited funds
D. Lending money to customers
8. Government usually
A. borrows funds directly from financial institutions.
B. maintains permanent deposits with financial institutions.
C. is a net supplier of funds.
D. is a net demander of funds.
9. By definition, the money market involves the buying and selling of
A. funds that mature in more than one year. C. stocks and bonds.
B. flows of funds. D. short-term funds.
10. The _____________________ is created by a financial relationship between suppliers and users of short-
term funds.
A. financial market B. money market C. stock market D. capital market

MOD 4
1. What is budgeting?
A. Having enough money to buy something.
B. Having money left over at the end of the month.
C. Having ability to pay bills on time.
D. Plan made in advance regarding the expenditure of money based on available income.
2. What is the purpose of a budget?
A. Estimating income and expenses
B. Saving for future expenses
C. Increasing income
D. Helping spend wisely
3. What is/are the objective/s of Proforma Financial Statements?
A. To give an idea of how the actual statement will look like.
B. To facilitate comparisons of historic data and projections of future
Performance.
C. It helps you get financed because the lenders or investors will see
how you would use their money to grow your business.
D. All of the above.
4. Financial planning is a process to ensure that ________________.
A. the cash flow of the company is positive.
B. the company is solvent.
C. the resources are unlimited.
D. the company is liquid and has paid all its investors’ dividends.
5. A plan to be effective should be created using S.M.A.R.T. philosophy. What do S.M.A.R.T. mean?
A. Specific, measurable, assignable, realistic, time-related
B. Specific, macro, assignable, realistic, time-related
C. Smart, measurable, assignable, realistic, time-related
D. None of the above
MOD 4 ACTIVITY 1
1. Which of the following statements about budgeting is incorrect?
A. Budgets provide direction and coordination. C. A budget is a financial plan.
B. Budgets motivate staff. D. A budget looks back and review performance.
2. Which of the following is normally prepared first?
A. Cash Budget B. Production Budget C. Sales Budget D. None of the above
3. What is a sales budget?
A. A plan of items to be sold.
B. A plan of how much an item will cost.
C. A plan for how much money should be made in a given period.
D. A plan for tracking an inventory and how much they sell.
4. Why many small businesses do not use budget?
A. Budgeting is for large firms only. C. Small businesses do not record variances.
B. Budgeting can be time consuming. D. All of the above.
5. Which of the following is NOT a benefit of budgeting?
a. It is a source of motivation.
b. It is a means of coordinating business activities?
c. It prevents company to incur net losses.
d. It promotes study, research, and focus on the future.
MOD 5 PRETEST

1. Which of the following is true about cash management?

A. A cost of holding cash is the liquidity it gives the firm.
B. A cost of holding cash is the interest income earned on the outstanding cash balance.
C. Effective cash management results in minimization of the total interest earnings involved with
holding cash.
D. The primary objective in cash management is to keep the investment in cash as low as possible
while still operating efficiently and effectively.
2. The speculative motive of holding cash refers to:
A. Utilize cash in internal projects
B. Use for any future loss the company is expecting
C. Avail of any future investment opportunity
D. Utilize cash for international project
3. It is called liquid assets which include cash and savings that can be converted to cash quickly and easily.
A. Fixed Assets B. Liability C. Current Assets D. Equity
4. Net Working Capital is defined as:
A. Total assets minus liabilities C. Current assets minus long-term liabilities
B. Total assets minus equity D. Current assets minus current liabilities
5. Inventory management refers to:
A. management and control of inventory
B. management and control of services, inventory, and equipment
C. control of supplies coming into the organization and supplies used
D. control of materials purchased.
MOD 5 ACT 1
1. What is a Working capital management?
A. It is the placement of the firm’s debt and equity issues.
B. It is the financing and management of the firm’s current assets.
C. It is also known as inventory management.
 D. It is the management of the firm’s capital assets.

2. What is the transactional motive of holding cash?

A. To keep a cash reserve for purchasing goods and services to balance out the cash inflows and
outflows.
B. To keep the cash for all the transactions made during a periodic term.
C. To keep the cash for transactions mandatory for day to day activities.
D. To keep the transactions for foreign trading.
3. Below are all components of working capital except:
A. Cash B. Inventories C. Marketable Securities D. Notes Payable
4. In what order will a company’s current assets appear on a classified balance sheet?
A. Alphabetical order C. From largest to smallest amount
B. Company’s choice D. Order of Liquidity
5. Which of the following would not be important in examining the firm's build-up of accounts receivable,
cash, and current assets:
A. A brief cash budget C. Income Statement
B. Cash receipts and cash payments schedules D. Sales forecast

MOD 6 PRE
1. What is debt financing?
A. It is a money from the pocket of the owner
B. It is a money from stocks.
C. It is a stolen money.
D. It is a raised money for working capital or expenditures.
2. What is an equity?
A. It is a money borrowed from loans C. It is a monthly payment.
B. It is the value of shares issued by a company. D. It is needing cash now.
3. In which financial situation should you use debt financing?
A. When there is an emergency and you need money immediately.
B. When you have time and do not need the money right now.
C. When you want to celebrate your birthday but no available funds to finance it.
D. All of the above
4. When should equity financing be used?
A. When starting a new business.
B. It there was an unforeseen expense and you need money now.
C. All of the above
D. None of the above
MOD 6 POST
4. Which of the following is not an example of debt financing?
A. Issuing bonds payable C. Issuing a note payable to the bank
B. Issuing shares of stock D. Purchasing with credit cards
5. Equity financing differs from debt financing in that
A. Equity financing results in added liabilities on the balance sheet.
B. Debt financing relinquishes partial ownership of the business.
C. Debt financing must be repaid with interest whereas equity financing trades cash for shares
of ownership in the company.
D. Equity financing carries a structured payback obligation.

MOD 7 PRE
1. The simple interest formula is I=PrT. What does the T represent?
A. Principle B. Time C. Interest D. Percent Rate

MOD 7 POST
1. Which of the following answers have two terms that are synonymous?
A. Future value and present value
B. Today’s peso and time value of money
C. Inflation and future value
D. Inflation and time value of money
2. Which of the following is the formula to calculate the present value of a
future payment?
A. PV =(FV /r)∗t C. PV =FV / I
B. PV =(I /t )∗FV D. PV =FV ( 1+ r )T
3. Which of the following statement is correct?
A. Annuity is a series of payments to be received during a period of time.
B. Annuity is a series of payments to be received at a common interval during a period of time.
C. Annuity is a series of equal payments to be received at a common interval during a period
of time.
D. Annuity is the present value of a set of payments to be received during a future period of
time.
4. Which of the following statement is correct?
A. Simple interest pays interest on your previous balance plus your previous earned interest;
compound interest pays interest only on your original balance.
B. Compound interest pays interest on your previous balance plus your previous earned
interest; simple interest pays interest only on your original balance.
C. Banks with compound interest pay interest more reliably.
D. The formula for compound interest includes more elements.
5. Time value of money is an important finance concept because:
A. It takes risk into account
B. It takes time into account
C. It takes compound interest into account
D. All of the above