Do You Have Basic Idea Of Business Finance?

24 Questions

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Do You Have Basic Idea Of Business Finance?

Business finance refers to money and credit utilized in the business. It's the crucial part of a business where a firm has to purchase assets, goods, raw materials. It's a multiple choice business Finance test with 25 questions. Let's try out the quiz. All the best!


Questions and Answers
  • 1. 
    Anything generally accepted as a means for paying for goods and services is known as _____________.
    • A. 

      A federal reserve note

    • B. 

      Barter

    • C. 

      Legal tender

    • D. 

      Money

  • 2. 
    Chi-Chung recently took a trip to Uruguay. He was struck by the fact that Uruguayan coins were so large and heavy that his pockets simply couldn't accommodate an ordinary day's supply. In Chi-Chung's opinion, Uruguayan coins could be more ________.
    • A. 

      Divisible

    • B. 

      Stable

    • C. 

      Portable

    • D. 

      Durable

  • 3. 
    Pham traded 15 acres of undeveloped property for a new home on a one-acre lot. This exchange can be considered a(n) _________.
    • A. 

      Highly liquid store of value

    • B. 

      Example of barter

    • C. 

      Easily divisible form of money

    • D. 

      A good form of money

  • 4. 
    • A. 

      Mutual fund shares

    • B. 

      Shares of common stock

    • C. 

      Corporate bonds

    • D. 

      Checking account

  • 5. 
    All of the following are included in M1 with the exception of ___.
    • A. 

      Money market mutual funds

    • B. 

      NOW accounts

    • C. 

      Checking accounts

    • D. 

      Traveler's checks

  • 6. 
    In order to be included in M1, a financial asset _____.
    • A. 

      Must be a bank account

    • B. 

      Cannot pay any interest

    • C. 

      Must serve as a medium of exchange

    • D. 

      Must be government insured

  • 7. 
    All of the following financial assets are included in M2 EXCEPT ___.
    • A. 

      Bank savings accounts

    • B. 

      Share draft accounts

    • C. 

      Money market mutual funds

    • D. 

      Common stock mutual funds

  • 8. 
    All of the following are reasons why organizations need funds EXCEPT __.
    • A. 

      To finance inventories

    • B. 

      To make interest payments on loans

    • C. 

      To add to owner's equity

    • D. 

      To meet day-to-day cash needs

  • 9. 
    • A. 

      A Treasury bill

    • B. 

      Shares of common stock

    • C. 

      Bond issued by a small city

    • D. 

      Farmland

  • 10. 
    Abdul is the financial manager for Watertown Software. He needs to raise funds for his company and should probably consider ________.
    • A. 

      Debt capital only

    • B. 

      Equity capital only

    • C. 

      The most beneficial combination of debt and equity capital

    • D. 

      A government loan

  • 11. 
    All of the following would add equity capital to a business EXCEPT ___.
    • A. 

      Payment of dividends to shareholders

    • B. 

      Venture capital investments

    • C. 

      Company profits

    • D. 

      Exercise of employee stock options

  • 12. 
    All of the following statements concerning debt capital are correct EXCEPT ________.
    • A. 

      All forms of debt eventually mature

    • B. 

      Lenders have a prior claim to assets

    • C. 

      Lenders have a prior claim to interest payments

    • D. 

      Lenders have voting rights in the election of a firm's board of directors

  • 13. 
    All of the following are sources of short-term funds EXCEPT ______.
    • A. 

      Trade credit

    • B. 

      Bank loans

    • C. 

      Commercial paper

    • D. 

      Privately placed bonds

  • 14. 
    A firm would most likely finance _______ using short-term sources.
    • A. 

      Inventory

    • B. 

      Buildings

    • C. 

      Another company

    • D. 

      Machinery

  • 15. 
    Mitch raises money from wealthy individuals and institutional investors for a variety of promising new companies. In exchange, he will become part owner of those businesses. Mitch is a(n) _____________.
    • A. 

      Underwriter

    • B. 

      Venture capitalist

    • C. 

      Entrepreneur

    • D. 

      Angel investor

  • 16. 
    • A. 

      A credit union

    • B. 

      A life insurance company

    • C. 

      A pension fund

    • D. 

      A mutual fund

  • 17. 
    All of the following statements are correct EXCEPT _______.
    • A. 

      The number of commercial banks is declining each year

    • B. 

      Commercial banks are prohibited from selling securities or insurance

    • C. 

      Commercial banks are the most important financial institution

    • D. 

      Banks offer the widest range of services of any financial institution

  • 18. 
    Commercial banks obtain most of their funds from_________.
    • A. 

      The government

    • B. 

      The sale of securities

    • C. 

      Stockholders

    • D. 

      Depositors

  • 19. 
    Banks use most of their funds to _________.
    • A. 

      Buy securities

    • B. 

      Buy physical assets

    • C. 

      Make loans

    • D. 

      Buy other banks

  • 20. 
    Omar made a purchase at his local Walmart. Instead of writing a check, Omar used a special card issued by his bank. The card has a Vista logo on the front. He entered his PIN and the purchase was automatically deducted from his checking account. Omar used his _____.
    • A. 

      Debit card

    • B. 

      Credit card

    • C. 

      ATM card

    • D. 

      Point-of-sale card

  • 21. 
    Deposit insurance shifts most of the financial risk of bank failures from depositors to ________.
    • A. 

      The federal government

    • B. 

      The bank's stockholders

    • C. 

      Borrowers

    • D. 

      The bank's creditors

  • 22. 
    If the Fed reduced reserve requirements, ___________.
    • A. 

      Banks would have less money to lend businesses and consumers

    • B. 

      Interest rates would fall

    • C. 

      Inflation would decline

    • D. 

      Economic growth would decline

  • 23. 
    • A. 

      The Fed buying government securities

    • B. 

      The Fed raising the margin requirement

    • C. 

      The Fed raising the reserve requirement

    • D. 

      The Fed raising the discount rate

  • 24. 
    Alexis purchased numerous shares of Google when the company first went public, and now she is looking to sell them at a considerable profit. What would be the main concern for Alexis at the moment she sells?
    • A. 

      Tax on income

    • B. 

      Stability of principal

    • C. 

      Liquidity

    • D. 

      Tax on capital gains