Business Finance Quiz: Lesson 2

What are the four functions of a VP for finance (CFO)?

• Marketing, Hiring, Selling, Investing

• Financing, Investing, Operating, Dividend policies

• Budgeting, Planning, Hiring, Selling

• Accounting, Financing, Marketing, Product Development

Which of the following refers to the mix of different types of financing?

• Capital budgeting

• Financial leverage

• Capital structure

• Cash flow management

What is the typical debt ratio for capital-intensive industries?

• 10-20%

• 20-30%

• 60-70%

• 30-40%

Which theory suggests firms prefer internal financing first?

• Trade-off Theory

• Pecking Order Theory

• Capital Structure Theory

• Financial Distress Theory

What must a company have to declare cash dividends?

• High debt

• Retained earnings and cash

• High revenue

• A large market share

Which of the following is an example of a financial asset?

• Bank loan

• Cash in hand

• Accounts payable

• Bonds payable

What is a financial liability?

• An asset owned by a company

• A contractual obligation to deliver cash

• An investment in stocks

• A type of equity instrument

Which bond type has a single maturity date?

• Serial bonds

• Debenture bonds

• Term bonds

• Callable bonds

What is a characteristic of preferred stocks?

• They have voting rights.

• They receive dividends after common stocks.

• They have fixed or predetermined dividends.

• They have higher risk than common stocks.

Which financial institution acts as a fiduciary on behalf of a person or business?

• Commercial bank

• Trust company

• Credit union

• Investment bank