REVIEWER in FINANCIAL MANAGEMENT

1. A _____ is a long- term contract under which a borrower agrees to make payments of interest and principal on specific dates.
A. Bond B. Stock [Link] Holding D. Insurance
2. The stated face value of a bond is referred to as its _____ value and is usually set at $1 000.
A. Par [Link] Value C. Future Value [Link] Present Value
3. The coupon interest rate on a bond is determined by dividing the _____by the maturity date of the bond.
A. Par value [Link] Value [Link] Payment [Link] Value
4. The date at which the par value of a bond is repaid to each bondholder is known as the _____.
A. Maturity date B. Issue Date C. Expiry Date D. Call Date
5. The rate of return earned by purchasing a bond and holding it until maturity is known as the bond’s _____.
A. Yield to Maturity B. Coupon rate C. Interest rate D. Coupon payment
6. The _____ is the annual interest payment divided by the bond’s current price.
A. Interest Rate B. Bank rate C. Maturity rate D. Coupon Rate
7. One in which the payments or receipts occur at the end of each period. In five- year contract, the last payment is made at
the end of the fifth year.
A. Ordinary Annuity B. Deferred Annuity C. Perpetuity D. Security Bonds
8. The value of money received today is different from the value of money received after some time in the future.
A. Present Value B. Future Value C. Net Present Value D. Time Value of Money
9. It is about moving money backwards in time. It’s the process of determining the present value of money to be received in
the future
A. Compounding B. Discounting C. Valuing D. Charging
10. It is a cash flow, either income or outgoings, involving the same sum in each period. An annuity is the payment or receipt of
equal cash flows per period for a specified amount of time
A. Annuity B. Perpetuity C. Bond D. Stock
11. It is a security that represents the ownership of a fraction of a corporation.
A. Stock B. Equity C. Bond D. Holdings
12. Units of stock are called _____.
A. Dividends B. Shares C. Holdings D. Apportionment
13. Stocks are bought and sold and bought here.
A. World Market B. Stock Exchange C. Stock Markets D. Public Market
14. A stock is a general term used to describe _____.
A. Ownership Certificate B. Share Certificate C. Holdings Certificate D. Ownership
15. A share, on the other hand, refers to the _____.
A. Bond Coupon B. Stock Certificate C. Ownership Certificate D. Company Certificate
16. It is the process of determining the intrinsic value of a share of common stock of a company.
A. Bond valuation B. Stock valuation C. Valuation [Link] evaluation
17. The purpose of stock valuation.
A. Find value of shares B. Find the value of common stocks
B. Find value of equity D. Find value of firm
18. We compute the “------ so we know if the stock market value is cheap or expensive at a given time and therefore, we can
buy or sell our stock if we are in a stock engagement business.
A. Find value of shares B. Find the value of common stocks
C. Find value of equity D. Find value of firm
19. The value of the stock is determined with reference to market value of comparable stocks. Relative valuation
A. Relative valuation [Link] cash flow C. Discounted cash flow D. Growth rate
20. It can be used to value a majority i.e. controlling ownership based on operating activities less any expected changes in
working capital less any expected capital expenditure.
A. Free cash flow Model B. Discounting method C. Multi-stage growth Model D. Gordon Growth Model
21. It is a security that represents the ownership of a fraction of a corporation.
Refers to the possibility of an unfavorable event occurring. The higher the risk, the greater the probability of an unfavorable
event or the more unfavorable the event could be.
A. Risk B. Return C. Investing D. Gambling
22. Refers to the concept that by holding a number of different securities (ideally not just stocks) from a spectrum of industries,
we can negate the impact of company specific factors on our returns
A. Diversification B. Investment [Link] D. Selling
23. Gives us an idea of how much we will make on the investment.
A. Expected profit [Link] return C. Investing [Link]
24. This leftover risk is referred to as ____ (or market/systematic risk). Examples of non-diversifiable risks include political
events (such as wars), energy price shocks,
A. Government risk [Link] currency risk [Link]-diversifiable risk [Link] risk
25. Changes in interest rates, recessions, etc. Any risk factor that impacts virtually all stocks.
A. Government risk [Link] currency risk C. Non-diversifiable risk D. Diversifiable risk
26. Another name for non-diversifiable risk is “market risk” because these sources of risk tend to affect the entire market as
opposed to an individual security or industry.
A. Business risk B. Financial risk C. Diversifiable risk [Link] risk
27. This risk does not refer to risk impacting a specific industry. Instead it refers to risk impacting the broad economy (most
stocks).
A. Business risk B. Financial risk C. Diversifiable risk D. Market risk
28. A tool that measures how sensitive a stock is to the overall market.
A. Beta B. Alpha C. Standard deviation D. Variance
29. Measures total risk (diversifiable risk + market risk) for a security
A. Beta B. Alpha C. Standard deviation D. Variance
30. Measures the degree of market (non-diversifiable) risk.
A. Beta B. Alpha [Link] deviation [Link]
31. These are depository institutions which are largely financed by customer deposits.
A. Commercial banks [Link] Banks [Link] Bank [Link] Bank
32. Depository Institutions gain profits from depositors. All of these activities are serviced by depository institutions except one.
A. Checking deposits B. Firearms deposit C. Time deposit D. Savings deposit
33. Corn, gold and oil and other natural resources can be bought in this market.
A. Stock market B. Commodity market [Link] market [Link] market
34. Financial markets in which debt instruments are issued and traded
A. Stock market B. Commodity market C. Capital market [Link] market
35. It refers to a marketplace where investors trade derivatives and securities, such as stocks and bonds.
A. Stock market B. Financial market C. Capital market D. Bond market
36. A market with centralized authority and set regulations are Exchange Traded Market, like NYSE, NASDAQ
A. Stock Exchange [Link] market [Link] market [Link] Traded Market
37. Markets with customized procedures and decentralized organization. It is a type of secondary market. Smaller organizations
prefer this market as it has fewer regulations and is less expensive.
A. Over-The-Counter Market [Link] market C. Money market D. Exchange Traded Market
38. Market that trade derivatives and securities. Some of these markets include the stock market, the capital market, the equity
security market, primary markets, the bond market, the money market
A. Over-The-Counter Market B. Financial market C. Commodity market D. Exchange Traded Market
39. It is a financial asset whose value is represented in paper or electronic form like treasury bonds or term deposit
A. Financial instrument B. Certificate of deposits C. Credit cards D. Long-term deposit
40. It is a financial asset where there is a formal secondary market where the asset may be bought or sold, example of which
are shares of stocks.
A. Financial instrument B. Certificate of deposits C. Financial Security D .Long-term deposit
41. The yield of an annuity may be found by discounting to find the PV, and then finding the percentage change from the PV to
the FV.
A. Annuity B. Perpetuity C. Loan D. Mortgage
42. The discount rate at which the NPV of an investment equals 0.
A. Return on Equity B. Internal Rate of return C. Accounting Rate of Return D. Net Present value
43. The IRR calculates an annualized yield of an annuity.
A. Annuity B. Perpetuity C. Loan D. Mortgage
44. In finance, this term describes the amount in cash that returns to the owners of a security
A. Interest B. Discount C. Yield D. Principal
45. Instruments (bonds, notes, bills, strips, zero coupon), and some other investment type insurance products
A. Fixed income B. Salaries C. Wages D. Diversifiable income