Republic of the Philippines

Bato Institute of Science and Technology

Dolho, Bato, Leyte
Business Finance
Preliminary Examination

NAME: Date:
Instructor: Argene B. Abellanosa Section: Score:

QUIZ 1: TRUE OR FALSE

Instruction: Before each statement, write TRUE if the statement is correct or FALSE if the statement is incorrect.

1. Revenues are costs of doing business.

2. The statement of cash flows shows the cash inflows and cash outflows from operating, investing,
and financing activities.
3. Expenses are the costs incurred to produce revenues.
4. The basic accounting equation is REVENUES – EXPENSES = NET INCOME
5. Finance is the life blood and nerve center of a business.
6. The balance sheet lists the company’s assets, liabilities, equity, income, and expenses.
7. Cash Instruments are financial instruments that have values determine from underlying assets, such
as resources, currency, bonds, stocks, and stock indeces.
8. A SAFE is an agreement between two parties in which the seller grants the buyer the right to
purchase or sell a certain number of derivatives at a predetermined price for a specific period.
9. When expenses exceed revenues, the business has net income.
10. Net Income is often called the earnings of the company.

QUIZ 2: MULTIPLE CHOICE (2 points each)

Instruction: Encircle the letter corresponding to the correct answer for each of the questions provided below.

1. A currency agreement in which the actual exchange of currency is no later than the second working day
after the original date of the agreement.
a. Forward
b. Spot
c. Future
d. SAFE
2. It refers to the act of simultaneously buying and selling currencies with different specified value dates.
a. Outright Forwards
b. Spot
c. SAFE
d. Currency Swap
3. Equity-based financial instruments includes all, EXCEPT:
a. Common Stock
b. Transferable subscription rights
c. U.S. treasuries
d. Convertible debentures
4. Obtaining funding for the firm’s operations and investments and seeking the best balance between debt
and equity.
a. Financing
b. Operating
c. Investing
d. None of the above
5. It is a financial instrument that has monetary value and is traded on the stock market.
a. Security
b. Deposit
c. Loan
d. Derivative
6. It refers broadly to any marketplace where the trading of securities occurs, including the stock market,
bond market, forex market, and derivatives market, among others.
a. Stock Market

1
 b. Financial Instrument
c. Financial Market
d. All of the above
7. They assist individuals and institutions in buying and selling securities among available investors.
a. Mortgage Companies
b. Investment Banks
c. Credit Unions
d. Brokerage Firms
8. A newer entrant to the financial institution market.
a. Commercial Banks
b. Credit Unions
c. Savings Associations
d. Internet Banks
9. They offered products to individual consumers
a. Commercial Banks
b. Retail Banks
c. Savings Associations
d. Investment Banks
10. They are the financial institutions responsible for the oversight and management of all other banks
a. Commercial Banks
b. Loan Associations
c. Mortgage Companies
d. Central Banks
11. These are the Elements or Scope of Financial Management, EXCEPT:
a. Financial Decisions
b. Investment Decisions
c. Operating Decisions
d. Dividend Decisions
12. Which is not a function of financial management?
a. Determination of capital composition
b. Choice of sources of funds
c. Disposal of surplus
d. Understanding capital markets
13. Finance manager has to make decisions with regards to cash management.
a. Financial controls
b. Management of cash
c. Investment of funds
d. Estimations of capital requirements
14. Which is not a main function of a financial manager?
a. Raising of Funds
b. Profit Planning
c. Investment of funds
d. Allocation of funds
15. It means planning, organizing, directing and controlling the financial activities such as procurement and
utilization of funds of the enterprise.
a. Financial Instrument
b. Financial Market
c. Financial Management
d. Financial Institution

QUIZ 3: ESSAY (10 Points)

Should I invest in publicly traded securities?