Sample Question of Fin110
Section A (20 Multiple Choice Questions) (50 marks)
Select the appropriate response:
1. The primary financial goal of a corporation is to maximize
A Shareholder’s wealth B Earnings per share C Stock price D A & C
2. Which of the following is not one of the three major areas of finance?
A Accounting B Investments and financial markets C Financial management of companies D The banking system
3. A savings-surplus unit is one:
A that needs to borrow funds from a surplus unit B whose income exceeds its spending C whose spending exceeds its income D that generally is a company
4. A _______ is a financial intermediary that receives premium payments that are used to purchase assets to cover future possible payments.
A building society B credit union C savings bank D life insurance office
5. Financial markets:
A act as intermediaries by holding a collection of assets and issuing claims based on them to savers B issue claims on future cash flows of individual borrowers directly to lenders C transmit funds indirectly between lenders and borrowers D usually provide lenders with lower returns than other financial intermediaries
6. The stock market is: A An interconnected network of brokers and exchanges licensed by the government to assist investors in trading securities B Located in a large building in Kuala Lumpur called the stock exchange C An exchange that allows people to trade stock certificates in person D Very much like a department store in that stocks from different industries are traded
7. The principle behind time value of money is based on the fact that:
A A sum of money in hand today is worth more than the same sum in the future B A sum of money in hand today is worth less than the same sum in the future C A sum of money in the future is worth less than the same sum in hand today D A & C
8. If an investor
Select the appropriate response:
1. The primary financial goal of a corporation is to maximize
A Shareholder’s wealth B Earnings per share C Stock price D A & C
2. Which of the following is not one of the three major areas of finance?
A Accounting B Investments and financial markets C Financial management of companies D The banking system
3. A savings-surplus unit is one:
A that needs to borrow funds from a surplus unit B whose income exceeds its spending C whose spending exceeds its income D that generally is a company
4. A _______ is a financial intermediary that receives premium payments that are used to purchase assets to cover future possible payments.
A building society B credit union C savings bank D life insurance office
5. Financial markets:
A act as intermediaries by holding a collection of assets and issuing claims based on them to savers B issue claims on future cash flows of individual borrowers directly to lenders C transmit funds indirectly between lenders and borrowers D usually provide lenders with lower returns than other financial intermediaries
6. The stock market is: A An interconnected network of brokers and exchanges licensed by the government to assist investors in trading securities B Located in a large building in Kuala Lumpur called the stock exchange C An exchange that allows people to trade stock certificates in person D Very much like a department store in that stocks from different industries are traded
7. The principle behind time value of money is based on the fact that:
A A sum of money in hand today is worth more than the same sum in the future B A sum of money in hand today is worth less than the same sum in the future C A sum of money in the future is worth less than the same sum in hand today D A & C
8. If an investor