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Finance Sample Question Paper: Key Topics

This document is a sample finance question paper with 40 questions covering essential finance topics such as time value of money, financial ratios, investment decisions, risk and return, and capital budgeting. It includes definitions, calculations, and explanations related to various financial concepts. The questions are designed to test knowledge and understanding of key finance principles.

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laylamth01
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21 views2 pages

Finance Sample Question Paper: Key Topics

This document is a sample finance question paper with 40 questions covering essential finance topics such as time value of money, financial ratios, investment decisions, risk and return, and capital budgeting. It includes definitions, calculations, and explanations related to various financial concepts. The questions are designed to test knowledge and understanding of key finance principles.

Uploaded by

laylamth01
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Finance – Sample Question Paper

This is a sample finance question paper containing 40 questions covering key finance topics such
as time value of money, financial ratios, investment decisions, risk and return, and capital
budgeting.

1. Define the time value of money.

2. What is the difference between simple interest and compound interest?

3. Calculate the future value of R10,000 invested for 5 years at 8% p.a. compound interest.

4. Explain the concept of present value.

5. Calculate the present value of R15,000 to be received in 4 years at a discount rate of 10%.

6. What is the difference between nominal and effective interest rates?

7. Explain what an annuity is.

8. Calculate the future value of an ordinary annuity of R1,000 per year for 5 years at 6%.

9. What is perpetuity in finance?

10. Define the term ‘financial leverage’.

11. Explain the difference between operating and financial leverage.

12. What is the formula for the debt-to-equity ratio?

13. Calculate the debt-to-equity ratio if total debt is R200,000 and equity is R300,000.

14. Define working capital.

15. Why is liquidity important for a business?

16. Explain the current ratio and provide its formula.

17. Calculate the current ratio if current assets are R120,000 and current liabilities are R80,000.

18. Define the term 'capital budgeting'.

19. List two common capital budgeting techniques.

20. Explain Net Present Value (NPV).


21. Calculate the NPV of a project with cash inflows of R20,000 per year for 3 years, discount rate
10%, and initial investment R50,000.

22. Explain Internal Rate of Return (IRR).

23. What is Payback Period, and why is it used?

24. Define the term 'risk' in finance.

25. Differentiate between systematic and unsystematic risk.

26. Explain the concept of portfolio diversification.

27. Define expected return of an investment.

28. Calculate the expected return of a portfolio with 50% in stock A (10% return) and 50% in stock B
(15% return).

29. What is the Capital Asset Pricing Model (CAPM)?

30. Write the formula for CAPM.

31. Define beta in finance.

32. Explain the difference between market risk and specific risk.

33. What is the Efficient Market Hypothesis (EMH)?

34. Explain the difference between common stock and preferred stock.

35. Define dividend yield and provide the formula.

36. What is the difference between primary and secondary markets?

37. Explain what bonds are and list two types of bonds.

38. Calculate the price of a zero-coupon bond with face value R1,000 due in 5 years at 8% discount
rate.

39. Define liquidity risk.

40. Explain the difference between financial risk and business risk.

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