#1
2. What does ROI stand for in financial terms?
Return on Investment
Rate of Income
Revenue Over Inflation
Risk of Investment
#2
1. What is the primary goal of financial management?
Maximizing profits
Minimizing costs
Maximizing shareholder wealth
Minimizing taxes
#3
3. Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Income statement
Balance sheet
Cash flow statement
Statement of retained earnings
#4
5. In financial management, what does the term 'Leverage' refer to?
Increasing debt to finance operations
Decreasing debt to increase liquidity
Maximizing equity investments
Minimizing financial risk
#5
6. What is the purpose of a budget in financial management?
To track historical financial performance
To plan and control future financial activities
To distribute profits to shareholders
To calculate return on investment
#6
7. What does the term 'Diversification' mean in the context of investment?
Concentrating investments in a single asset
Spreading investments across different assets
Reducing the overall investment portfolio
Investing only in high-risk assets
#7
10. What does the Debt-to-Equity ratio indicate about a company's financial structure?
The level of profitability
The proportion of debt relative to equity
The liquidity position
The asset turnover ratio
#8
11. What is the concept of 'Time Value of Money' in financial management?
The importance of saving money over time
The idea that money has different values at different points in time
The influence of inflation on the value of money
The impact of interest rates on financial decisions
#9
4. What is the time value of money?
Money's ability to grow over time
Money's current purchasing power
Interest earned on savings
Inflation rate
#10
8. What is the formula for calculating the Net Present Value (NPV) of a project?
NPV = Initial Investment / Annual Cash Inflows
NPV = Future Value / Present Value
NPV = Present Value of Cash Inflows - Initial Investment
NPV = Total Revenue - Total Expenses
#11
9. What is the significance of the Efficient Market Hypothesis (EMH) in financial markets?
It suggests that financial markets are always inefficient
It implies that it is impossible to beat the market consistently
It advocates for active trading strategies
It promotes random investment decisions
#12
15. What is the significance of the Risk-Return Tradeoff in investment?
Higher risk is always associated with higher returns
Lower risk is always associated with higher returns
There is no relationship between risk and return
Higher risk is always associated with lower returns
#13
16. What is the role of a financial manager in working capital management?
To minimize long-term debt
To maximize shareholder wealth
To manage short-term assets and liabilities
To evaluate investment opportunities
#14
17. What does the term 'Hedging' refer to in the context of risk management?
Reducing risk by diversifying investments
Increasing risk to achieve higher returns
Protecting against potential losses by using financial instruments
Ignoring risks in financial decision-making
#15
18. What is the concept of 'Opportunity Cost' in financial decision-making?
The actual cost incurred in making a financial decision
The value of the best alternative forgone when a decision is made
The total cost of an investment
The future cost of an opportunity