Test on corporate finance for CFA level 1: quiz. Businesses have different ways of obtaining financial resources to fund their investments of help in aiding the functions within it. Do you know how to calculate the value of a firm or the present net worth of different projects? The quiz below will be a perfect way to test your understanding of the course so far. Do give it a shot!
The fair market value of a company
Liabilities minus assets
Contributed capital plus retained earnings
$16,775
$19,090
$25,000
If the NPV of a project is greater than 0, its PI will equal 0
If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0
If the PI of a project is less than 1, its NPV should be less than 0
Net profit margin = 37.32%
Asset turnover = 11.81%
Leverage = 1.87
6%
10%
10.4%
Becomes less profitable
Increases its investment in working capital
Reduces its accounts payable period
3.2 years
3.5 years
4 years
Shareholder; manager
Manager; owner
Accountant; bondholder
7.02%
9.12%
13.80%
Common stock shareholders
Board of directors
Top executive officers
365 days and $108,000
73 days and $120,000
73 days and $108,000
6%
8%
9%
$11,883
$13,883
$15,883
Becomes less profitable
Increases its investment in working capital
Reduces its accounts payable period
10.73%
16.00%
19.00%
$23.32
$29.14
$41.18
"Mature" company
Rapidly growing company
A Start up
Profit margins are normally consistent across firms within an industry
Sales are relatively stable and might not change, thus giving stability to stock price, even though earnings might change significantly
P/S multiple provides a framework to evaluate the effects of corporate policy decisions and price changes
-10.44, Reject
-13.81, Reject
-13.81, Accept