The three areas of finance are the following except:

1/1
Institutions and markets
Investments
Entrepreneurial finance
 
Financial management

 
Given free to current shareholders, who may either exercise them by buying new
shares or sell them in the market:
1/1
warrants
convertible security
options
share capital rights
 
 
Selected balance sheet data for the years ended December 31, 2019 and 2018 were
as follow: Net income (2019), P9,300,000 (2018), P17,500,000; Market price per
share, (2019) P12; (2018), P26. Number of shares of stock outstanding for both years,
4,600,000. What is the P/E ratio for 2018?
2/2
P2.02
P3.80
P5.94
P6.84
 
 
Which of the following will NOT occur in a recession?
1/1
An increase in inflation rates
 
An increase in unemployment levels
An increase in government spending
An increase in the balance of trade

 
The organization that is exclusively authorized to manage the trading of stocks of
listed companies.
1/1
Bureau of Internal Revenue
Securities and Exchange Commission
Department of Trade and Industry
Philippine Stock Exchange
 
 
If you invest P50,000 to earn 8% interest, which of the following compounding
approaches would return the lowest amount after one year?
1/1
Quarterly
Annually
 
Daily
Monthly

 
Loan against which a borrower pledges real property as collateral for the loan
1/1
Commercial paper
Bankers' acceptance
Mortgage loan
 
Treasury bond

 
Which of the following is incorrect?
1/1
Profitability varies directly with liquidity
 
Long-term financing has less liquidity risk but has a higher explicit cost, hence lower return
The greater the risk, the greater is the potential for higher return
More current assets lead to greater liquidity, but yield lower return

 
The study of how individuals prepare for financial emergencies, protect against
premature death and property losses and accumulate wealth.
1/1
Personal finance
 
Business finance
Entrepreneurial finance
Financial management

 
Which of the following principles is not considered as part of the six pillars of finance?
1/1
Reputation matters
Diversification of investments
Financial management
 
Time value of money

 
Anything generally accepted as a means of paying for goods and services and for
paying off debt.
1/1
Credit cards
Promissory notes (PN)
Money
 
Barter

 
Solvency is a firm’s ability to survive in the long-term by paying to long-term
obligations. Its key ingredients are capital structure and earning power. Capital
structure consists of
1/1
the capital stocks of the firm.
the firm’s total assets.
the firm’s sources of financing, whether long-term or short-term, of its assets.
 
the stockholders’ equity accounts.

 
Long-term debt instrument issued by the Philippine Government/Bangko Sentral ng
Pilipinas
1/1
Commercial paper
Bankers' acceptance
Mortgage loan
Treasury bond
 
 
Financial leverage or trading on equity is advantageous when
1/1
all of the corporation’s authorized capital stocks have already been issued.
a firm has an available credit line with its depository bank.
earnings from borrowed funds exceed borrowing costs.
 
a firm is in financial distress.

 
Groups primarily interested in the business enterprise's current and future level of
earnings and liquidity, debt, and activity:
1/1
creditors
investors
management
 
government financial regulators

 
Assume ABC Company deposits P25,000 with Phil National Bank in an account
earning interest at 6% per annum, compounded semi-annually. How much will ABC
have in the account after five years if interest is reinvested?
1/1
33,456
25,000
33,598
 
32,500

 
A P1000 bond pays 4% currently has a market price of P900. What is the current yield
on the bond?
1/1
4%
4.44%
 
3.6%
5%
Option 1

 
The organization that is exclusively authorized to manage the trading of stocks of
listed companies.
1/1
Securities and Exchange Commission (SEC)
Philippine Stock Exchange
 
Department of Trade and Industry
Board of Investments

 
Which of the following is an external economy of scale? *
1/1
Increase wage costs due to falling unemployment in the region
The employment of specialist managers by a firm to cope with higher output levels
The extension of low-cost telecommunication link to an area of the country not previously served
by the link
 
Cheaper finance in recognition of the firm’s increased share of the market and therefore its
stability

 
Loan against which a borrower pledges real property as collateral for the loan
1/1
Commercial paper
Bankers' acceptance
Mortgage loan
 
Treasury bond

 
The statement of cash flows
1/1
reports the revenues earned and expenses incurred by the firm during the period.
shows the company’s total assets, broken down into current and non-current assets.
shows the company’s capital structure for a period of time.
reports the net change in cash resulting from operating, investing, and financing activities of the
firm during the period.
 
 
This risk occurs when inflation increases over costs and can hurt the firm’s profitability
if it cannot raise prices to compensate for the increased expenses.
1/1
Business risk
Financial risk
Purchasing power risk
 
Interest rate risk

 
Short-term unsecured promissory note issued by a corporation with high-quality
credit *
1/1
Commercial paper
 
Bankers' acceptance
Mortgage loan
Treasury bond

 
The mechanism for bringing together suppliers (those having extra funds) with
demanders (those needing funds).
1/1
Logistics process
Investment process
 
Management process
Manufacturing process

 
Focuses on the financial planning, assets management, and fund raising activities that
will enhance the firm value.
1/1
Financial markets
Financial management
 
Financial investments
Financial system

 
Short-term unsecured promissory note issued by a corporation with high-quality
credit *
1/1
Commercial paper
 
Bankers' acceptance
Mortgage loan
Treasury bond

 
A program encouraging employees to invest in the employer’s share capital as a
motivation tool for workers and a way for the business to raise funds
1/1
Employees share capital ownership plan
 
Preemptive right
Share capital rights
All of the above

 
Through financial statement analysis, interested parties - such as managers,
investors, and creditors - can identify the company’s financial strengths and
weaknesses and know about the following, EXCEPT
1/1
profitability of the business firm.
the firm’s ability to meet its obligations.
safety of the investment in the business.
composition of management running the firm.
 
 
Contractual assets often backed by real assets that provide value or wealth to their
owners
1/1
Financial assets
 
Real assets
Individual networth
Intangible assets

 
Risk that cannot be eliminated through diversifications.
1/1
Business risk
Financial risk
Micro risk
Market or systematic risk
 
 
The goals of the business enterprises is/are the following:
1/1
Shareholders wealth maximization
Profit maximization
Behavior and social responsibility
All of the above
 
 
Refers to the options to buy securities at a specified price at a later date are a good
source of ordinary share capital financing
1/1
Share capital rights
 
Preemptive rights
Employees stock option
All of the above

 
An activity is undertaken by the investment bankers that involves buying a new
security issue, paying the issuer, and marketing the securities
1/1
Underwriting
 
Distributing
Advice
All of the above

 
Focuses on financial planning, assets management, and fundraising activities that will
enhance the firm value.
1/1
Financial markets
Financial investments
Financial management
 
Financial system

 
This risk is caused by variations in operating income over time because of changes in
unit sales, price, cost margin and/or fixed expenses.
1/1
Business risk
 
Exchange rate risk
Purchasing power risk
Interest rate risk

 
Any combination of financial assets or investments is called a
1/1
basket of goods
portfolio
 
non-current assets
current acquisition

 
Long-term debt instrument issued by the Philippine Government/Bangko Sentral ng
Pilipinas
1/1
Commercial paper
Bankers' acceptance
Mortgage loan
Treasury bond
 
 
A money market is most closely described as:
1/1
The market for short-term capital, enabling businesses and government to maintain liquidity
 
The market for trading unquoted company shares
The market for mortgages, enabling individuals to buy their own homes
A government agency for raising finance

 
Which of the following statements is incorrect?
1/1
The ratio of sales to working capital is a measure of liquidity and activity.
The number of days’ sales in receivables is a measure of liquidity, as well as of activity.
A high sales-to-working capital ratio would indicate that the firm is not susceptible to liquidity
problems.
 
The earnings per share is a profitability ratio

 
Which of the statements is following true concerning the areas of finance? I. Financial
markets are physical locations or electronic forums that facilitate the flow of funds
among investors, businesses, and governments. II. Financial institutions are
organizations or intermediaries that help the financial system operate efficiently and
transfer funds from savers and investors to individuals, businesses, and governments
that seek to spend or invest the funds in physical assets.
1/1
I only
Both I and II
 
II only
Neither I nor II

 
The risk cannot be eliminated through diversifications
1/1
Business risk
Micro risk
Financial risk
Market or systematic risk
 
 
In computing a ratio, when a balance sheet amount is related to an income statement
amount,
1/1
the income statement amount should be converted to an average for the year.
the balance sheet amount should be converted to an average for the year.
 
both amounts should be converted to an average for the year.
the amounts may be used as is to develop a meaningful ratio.

 
Wealth maximization is,
1/1
a. elimination of risk or uncetainty
b. acquisition of wealth for long term
 
c. maximization of the timing of returns since a quick return reduces the uncertainty
d. none of the above

 
In economics, it refers to a rise in the general level of prices of goods and services in
an economy over a period of time.
1/1
Deflation
Inflation
 
Recession
Depression

 
It is a hybrid of debt and equity. It has a fixed charge and increases leverage, but
payment of dividends is not a legal obligation.
1/1
preferred stock
 
common stock
bonds
commercial paper

 
Which of the following cannot be true?
1/1
Average variable costs falls
Average total costs falls
Average fixed costs falls
 
Marginal cost falls

 
Which of the following factors would weaken the long-term survival of a cartel?
1/1
Greater price elasticity of demand for the products in the long run
 
A high concentration of production in the hands of a few firms
Substantial costs associated with entry into the industry
Broadly similar cost structure between industry members

 
An activity is undertaken by the investment bankers because they are knowledgeable
about alternative sources of long-term funds, debt, and equity markets, and SEC
regulations.
1/1
Underwriting
Distributing
Advice
 
None of the above

 
What is interest?
1/1
Loan
An investment in stock
Payment for the use of money
 
Return on capital

 
First time that the company has sold stock to the public,
1/1
primary market
initial public offering (IPO)
 
secondary market
private placement

 
An activity is undertaken by the investment bankers that only involves marketing the
securities
1/1
Underwriting
Distributing
 
Advice
All of the above

 
Expenditures by individuals for durable goods, nondurable goods, and services
1/1
Personal consumption expenditures
 
Government expenditures
Gross private domestic investments
Capital formation

 
What is foreign currency hedging by means of borrowing the foreign currency
converting it to the home currency, and placing the home currency on deposit known
as?
1/1
forward rate hedging
money market hedging
 
matching
leading and tagging

 
Refer to the selling of formerly privately shares to new investors on the organized
stock exchange
1/1
Initial public offering (IPO)
 
Share capital market
Split dividends
Stock dividends

 
Which of the following statements is true concerning the areas of finance? I. Financial
markets are physical locations or electronic forums that facilitate the flow of funds
among investors, businesses, and governments. II. Financial institutions are
organizations or intermediaries that help the financial system operate efficiently and
transfer funds from savers and investors to individuals, businesses, and governments
that seek to spend or invest the funds in physical assets.
1/1
II only
Neither I nor II
I only
Both I and II
 
 
It is an organization whose function is to facilitate the purchase and sale of stocks and
other securities. It is a market where investors can buy and sell securities after they
have been offered in the primary market.
1/1
stock exchange
 
stock market
Mutual fund
Investment fund

 
The following are roles of the financial managers except:
1/1
Cash management
Raising and allocating funds
Selecting, hiring, and terminating finance staff
 
All of the above

 
The hedging approach to financing involves
1/1
the use of long-term debt to finance current assets
matching maturities of debt with specific financing needs
 
the use of short-term debt to finance non-current assets
issuance of equity securities to finance working capital requirements

 
Financial management is
1/1
Process of planning decisions in order to maximize wealth
 
Elimination of risk and return
Acqusition of funds
All of the above

 
This occurs when we invest in several different assets rather than just a single one.a.
Portfolio correlation c. Deviations
1/1
Portfolio correlation
Diversification
 
Deviations
Variations

 
Gross domestic product (GDP) is the
1/1
the total amount of expenditures for consumer goods and investments for a period of time.
total purchases by consumers, businesses, government, and foreign entities.
value of all goods and produced by the country by domestic firms, excluding those produced by
foreign-owned entities.
value of all goods and services produced by the country by both domestic and foreign entities.
 
 
The underwriting of a securities issue by a firm that serves as an intermediary
between the issuing business entity and the investing public
1/1
Investment banking
 
Commercial banking
Universal banking
Thrift banking

 
Setting aside funds for a period of time in order to receive expected future benefits.
1/1
Spending
Gifting phase
Investment
 
Consolidation phase

 
To facilitate the numerous transactions that the stock exchange processes and make
the market more orderly, all payments by all stockbrokers are done to a centralized
institution, called the,
1/1
Central processing house
Central intelligence agency
Clearing House
 
Central Bank Security

 
Measures a nation's output of goods and services achieved over a specified period,
1/1
Gross domestic product (GDP)
 
Gross national product (GNP)
Government expenditures, including gross investment
Net exports of goods and services

 
Physical assets that provide value or wealth to their owners
1/1
Financial assets
Real assets
 
Individual networth
Intangible assets

 
Investments in residential and non-residential structures, producers' durable
equipment, and business inventories,
0/1
Personal consumption expenditures
Government expenditures
Gross private domestic investments
Capital formation
 
Correct answer
Gross private domestic investments

 
Original issue market in which securities are initially sold,
1/1
primary market
 
private placement
secondary market
public offering

 
Contractual assets often backed by real assets that provide value or wealth to their
owners
1/1
Financial assets
 
Real assets
Individual networth
Intangible assets

 
Measures a nation's output of goods and services achieved over a specified period,
1/1
Gross domestic product (GDP)
 
Gross national product (GNP)
Government expenditures, including gross investment
Net exports of goods and services

 
Physical assets that provide value or wealth to their owners
1/1
Financial assets
Real assets
 
Individual networth
Intangible assets

 
Short-term obligations issued by the Philippine government/Bangko Sentral ng
Pilipinas (BSP),
1/1
Treasury note
Treasury bill
 
Real assets
Financial assets

 
Sale of securities to a small group of institutions or private investors,
1/1
primary market
secondary market
IPO
private placement
 
 
Fixed interest securities that pay P0.80 every six months are trading at a price of P40
each, though their face value is P50 each. What is the current rate of annual interest
available on investment of this type?
1/1
6%
3.75%
7.5%
4%
 
 
Promise of future payment for credit purchases by a firm and guaranteed by a
commercial bank
1/1
Commercial paper
Bankers' acceptance
 
Mortgage Loan
treasury bond
Option 5

 
For a firm to continue to supply in the short run the selling price must cover
1/1
total costs
marginal costs
variable costs
 
fixed costs

 
Investments in residential and non-residential structures, producers' durable
equipment, and business inventories,
0/1
Personal consumption expenditures
Government expenditures
Gross private domestic investments
Capital formation
 
Correct answer
Gross private domestic investments

 
Which of the following statements is correct?
1/1
Liquidity refers to the firm’s ability to pay all its obligations and to continue operations.
Solvency refers to a firm’s ability to survive in the long-term by paying its short-term obligations.
Trading on the equity refers to a firm’s sale of its own stocks in the stock exchange.
Ratio analysis addresses such issues as the firm’s liquidity, use of leverage, management of
assets, cost control, growth, and valuation.
 
 
It is a hybrid of debt and equity. It has a fixed charge and increases leverage, but
payment of dividends is not a legal obligation.
1/1
preferred stock
 
common stock
bonds
commercial paper

Untitled Question
Option 1

 
The ability of the banks to create credit is constrained by all the following except:
1/1
Leakages of cash out of the banking system
A reduced reserve ratio
 
Low demands for loan
Prudent lending

 
Ratios that relate the business enterprise's share capital price to its dividends,
earnings, or book value per share:
1/1
market value ratios
 
profitability ratios
solvency ratios
activity ratios
Option 1

 
What best describes the time value of money?
1/1
An investment in a deposit account
The relationship between time and money
 
The interest rate charged on a loan
An investment in stock

 
Wealth maximization is,
1/1
a. elimination of risk or uncetainty
b. acquisition of wealth for long term
 
c. maximization of the timing of returns since a quick return reduces the uncertainty
d. none of the above

 
Measures how readily a company can meet interest payment with profit from
operations.
1/1
Times interest earned ratio (TIE)
 
Debt to total asset ratio
Current ratio
Quick ratio

 
The arithmetic process whereby a future value decreases at a compound interest rate
over time to reach a present value is
1/1
compounding
discounting
 
compound interest
annuity

 
It is an organized activity involving the buying and/or selling of securities done within a
stock exchange.
1/1
Mutual funds
Stock market
 
Stock exchange
Secondary market

 
Which of the following correctly describes the sixth principle of finance which is
“Reputation matters”? I. To be successful, an organization or business must have the
trust and confidence of its various constituencies, including customers, employees,
owners, and the community. II. High-quality ethical behavior involves treating others
fairly by doing things right and just meeting legal and regulatory requirements.
1/1
I only
 
II only
Both I and II
Neither I nor II

 
Selected balance sheet data for the years ended December 31, 2019 and 2018 were
as follow: Net income (2019), P9,300,000 (2018), P17,500,000; Market price per
share, (2019) P12; (2018), P26. Number of shares of stock outstanding for both years,
4,600,000. What is the P/E ratio for 2019?
2/2
P2.02
P3.80
P5.94
 
P6.84

 
A contract to give the investor the right--but not an obligation to buy or sell something:
1/1
warrants
options
 
futures
all of the above

 
Groups primarily interested in the business enterprise's ability to repay interest and
principal on borrowed funds
1/1
creditors
 
investors
management
government financial regulators

 
Promise of future payment for credit purchases by a firm and guaranteed by a
commercial bank
1/1
Commercial paper
Bankers' acceptance
 
Mortgage Loan
treasury bond
Option 5

 
What are the advantages of the stock market?
1/1
Linquidity of the maket
Operates in full public view
Most accessible market
All of the above
 
 
Any vehicle into which funds can be placed with the expectation that they will generate
positive income and/or their value is preserved or increased.
1/1
Investment
 
Investment process
Block-chain system
Bit-coin currency

 
A stock dividend
1/1
Increases the debt-to-equity ratio of a firm
Decreases future earnings per share
 
Decreases the size of the firm
Increases shareholder’s wealth

 
A money market is most closely described as:
1/1
The market for short-term capital, enabling businesses and government to maintain liquidity
 
The market for trading unquoted company shares
The market for mortgages, enabling individuals to buy their own homes
A government agency for raising finance

 
A technique used by stock promoters to combine several small businesses in the
same industry into a company large enough to initiate an initial public offering (IPO) is
a
1/1
Sale-lease back
Roll-up
 
Dividend reinvestment plan
All of the above

 
Exercising this right permits investors to maintain voting control and protects against
dilution in ownership and earnings
1/1
Share capital rights
Preemptive rights
 
employees stock option
All of the above

 
Short-term obligations issued by the Philippine government/Bangko Sentral ng
Pilipinas (BSP),
1/1
Treasury note
Treasury bill
 
Real assets
Financial assets

 
The following are key participants in the investment process, except,
1/1
Government
Business
SEC
 
Individuals

 
Which of the following statement best defines the difference between the short run
and the long run?
1/1
Labor costs are fixed costs in the short run and variable in the long run
Economies of scale are present in the long run but not in the short run
At least one factor of production is fixed in the short run but in the long run it is possible to vary
them all
 
None of the factors of production is fixed in the short run

 
A hybrid of ordinary share capital and bonds issued when the business entity has
excessive debt and an issue of common shares might encourage corporate raiders to
try to take control of the business enterprise
1/1
Preference share capital
 
Ordinary share capital
Bonds
All of the above

 
Expenditures by individuals for durable goods, nondurable goods, and services
1/1
Personal consumption expenditures
 
Government expenditures
Gross private domestic investments
Capital formation

 
When a company desired to increase the market value per share of the company’s
stock, the company will implement
1/1
the sale of treasury stock
a reverse stock split
 
a stock split
a reverse stock split
 
Untitled Section
9 of 9 points
 
Jerry recently was offered a position with a major accounting firm. The firm offered
Jerry either a signing bonus of P30,000 payable on the first day of work or a signing
bonus of P35,000 payable after one year of employment. Assuming that the relevant
interest rate is 10%, which option should Jerry choose?
1/1
The signing bonus of P30,000 payable on the first day of work
Insufficient information to determine
The options are equivalent
The signing bonus of P35,000 payable after one year of employment
 
 
Altman Company will invest P300,000 today. The investment will earn 6% for 5 years,
with no funds withdrawn. In 5 years, the amount in the investment fund is. (You may
use the following FV factors at 6% for one period, 1.06; two periods, 1.1236; three
periods, 1.1910; four periods, 1.2625; five periods, 1.3382).
1/1
425,548
357,300
300,000
401,460
 
 
Which of the following tables would show the smallest value for an interest rate of 5%
for six periods?
1/1
Future value of an ordinary annuity of 1
Future value of 1
Present value of P1
 
Present value of an ordinary annuity of 1

 
Charlie Corp. is purchasing new equipment with a cash cost of P100,000 for an
assembly line. The manufacturer has offered to accept the P22,960 payment at the
end of each of the next six years. How much interest will Charlie Corp. pay over the
term of the loan?
1/1
100,000
137,760
22,960
37,760
 
 
Milner Company will invest P400,000 today. The investment will earn 6% for 5 years,
with no funds withdrawn. The Future value of P1 for one period at 6% is 1.06 and for
five periods, 1.338. In 5 years, the amount in the investment fund is
1/1
520,000
600,000
400,000
535,200
 
 
Consider the following statements regarding the time value of money: I. Present value
is the value now of a future sum or sums discounted assuming compound interest. II.
A peso received today is worth more than a peso promised at some time in the future.
1/1
Only statement I is true
Both statements are true
 
Both statements are false
Only statement II is true

 
A financing firm is offering to double your investment in five years. Using the Rule of
72, the estimated annual interest being offered is
1/1
This is a scam, you should refuse the offer.
12.50%
20.60%
14.40%
 
 
Mordica Company will receive P200,000 in 7 years. If the appropriate interest rate is
10%, the present value of the P200,000 receipt is
1/1
102,000
102,632
 
302,000
389,744

 
At the end of two years, what will be the balance in a savings account paying 6%
annually if P5,000 is deposited today?
1/1
5,000
5,618
 
5,300
5,955

Untitled Section
11 of 11 points
 
Source of return arising from an increase of an investment’s value or price
1/1
Dividend
Capital loss
Capital gain
 
Interest
 
Source of return arising from a decrease of an investment’s value or price
1/1
Capital gain
Interest
Capital loss
 
Dividend

 
Which of the following statements is NOT correct?
1/1
The Philippine Stock Exchange (PSE) is the only stock exchange operating in the Philippines.
The change in price or value of an investment is called capital gain if the value of the asset rises.
Systematic risks (market risks or macro-economic risks) are risks that can be diversified away.
 
Since it is difficult to forecast efficient markets, we should spread our funds across several
investments.

 
Which of the following statements is/are true concerning risk: I. Diversifications cannot
eliminate the risk that is inherent in the macroeconomy. II. The total risk of an asset
has two components: firm-specific risk and systematic or market risk.
1/1
Only statement I is true
Only statement II is true
Neither I nor II is true
Both statements are true
 
 
This risk is caused by variations in operating income over time because of changes in
unit sales, price, cost margin, and/or fixed expenses.
1/1
Exchange rate risk
Purchasing power risk
Interest rate risk
Business risk
 
 
This risk occurs when inflation increases over costs and can hurt the firm’s profitability
if it cannot raise prices to compensate for the increased expenses.
1/1
Interest rate risk
Financial risk
Business risk
Purchasing power risk
 
 
Which of the following is NOT systematic risks (macro-economic risks)?
1/1
Exchange rate risk
Liquidity risk
 
Inflation risk
Interest rate risk

 
This occurs when we invest in several different assets rather than just a single one.
1/1
Diversification
 
Deviations
Portfolio correlation
Variations

 
Any combination of financial assets or investments is called a
1/1
current acquisition
portfolio
 
non-current asset
basket of goods

 
The risk cannot be eliminated through diversifications.
1/1
Market or systematic risk
 
Micro risk
Business risk
Financial risk

 
This risk affects domestic companies that have a lot of foreign-related transactions or
whose raw material requirements are imported from abroad.
1/1
Purchasing power risk
Business risk
Exchange rate risk
 
Financial risk