WorksheetsBusiness Finance Quiz: Lesson 2
Total questions: 20
Worksheet time: 7mins
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
What is a callable bond?
A bond that cannot be redeemed before maturity.
A bond that can be converted into stocks.
A bond that may be redeemed before maturity at the issuer's discretion.
A bond secured by physical assets.
Which type of bank provides a variety of financial services, including commercial and investment services?
Cooperative bank
Thrift bank
Universal bank
Rural bank
Which of the following is NOT a characteristic of debenture bonds?
Backed by physical assets.
Reliant solely on the issuer's creditworthiness.
Issued by corporations.
Higher risk compared to secured bonds.
What is the primary role of a financial officer in terms of dividend policies?
To decide when to issue new shares
To determine when to declare cash dividends
To manage the company's marketing strategy
To oversee employee salaries
Which type of financial instrument is a contract that gives the holder the right to buy or sell an asset at a specified price?
Equity instrument
Derivative
Loan
Bond
What is a significant feature of a bond indenture?
It specifies the terms between the bond issuer and bondholder.
It is the same as a stock certificate.
It guarantees a return on investment.
It allows for immediate cash withdrawals.
What is the purpose of financial markets?
To provide loans to businesses
To facilitate public trading of securities
To manage corporate investments
To offer insurance products
Which financial institution is typically organized to serve its members and is a non-profit?
Commercial bank
Investment bank
Credit union
Trust company
What is an example of a secured bond?
Corporate debenture
Mortgage-backed security
Treasury bond
Convertible bond
What does the Trade-off Theory suggest?
Companies should avoid debt completely.
There is no optimal capital structure.
There is an optimal point where the benefits of debt equal its costs.
Companies should only use equity financing.
