Basic Finance W1 (MIT)

What is the key responsibility of the financial management function?

• To ensure that the company has enough funds on hand to support day-to-day operations

• To support competitive decision making that helps management to plan, control and evaluate business processes

• To provide independent assurance that an organisation's risk management, governance and internal control processes are operating effectively

• To address accounting and treasury functions and to handle risk-related planning activities

If you would like to trade debt and equity securities for customers, which finance career classification should you target?

• Corporate finance

• Commercial banking

• Investment banking

• Money management

When identifying projects that increase company value, one of the tasks for financial managers is to identify those projects where:

• benefits are likely to exceed the project's costs

• taking the project will increase the book value of the company's common share

• taking the project will decrease the book value of the company's debt outstanding

• the project's cost are worthwhile for investors

Which of the following is not one of the five basic corporate finance functions?

• External financing function

• Capital budgeting function

• Risk management

• Auditing

Which form of invested capital is subject to most of a company's business and financial risk?

• Debt capital

• Equity capital

• Borrowed capital

• Intellectual capital

Which of the following is not a true capital-raising event for a company?

• Primary market transaction

• Secondary market transaction

• Initial public offering

• A corporate loan from a bank

Which of the following defines corporate finance?

• The activities involved in managing cash (money) that flows through the business

• The process of producing statements that disclose an organisation's financial status to management, investors and the government

• The provision of financial data and advice to a company for use in the organisation and development of its business

• The function that coordinates the efforts of people to accomplish goals and objectives by using available resources efficiently

What is the objective of the capital budgeting function?

• To select the best projects in which to invest the company's funds based on expected risk and return

• To provide useful information for financial decision making

• To provide the necessary information to managers and supervisors to help them to discharge their functions of organising, planning, control and decision making

• To measure performance, assess risk and to allocate scarce resources

The risk management function involves identifying, measuring and managing the company's exposure to all types of risk. Which of the following describes risks that businesses commonly face?

• Losses that can result from adverse interest rate movements

• Changes in commodity prices and fluctuations in currency values

• Hardware or network connection failure and/or the death or injury of an employee

• Options A and B are both correct.

Which finance career classification involves analysing a company's business processes and strategies as well as recommending a change in practice in order to make a company more competitive?

• Corporate finance

• Commercial banking

• Investment banking

• Consulting