Finance Fundamentals Quiz

Introduction

Finance deals specifically with the proper handling of funds: investing, budgeting, and making decisions that add maximum value to the firm. It incorporates risk management into the equation and combines it with strategy to achieve long-term sustainability. This quiz revolves around the fundamental aspects of both corporate and personal finance.

Quick Info: | 🟢 Beginner | ⏱️ 15 Minutes | ❓ 10 Questions

Key takeaways

✔️Understanding how effective fund management supports value creation and long-term sustainability.
✔️Gaining insight into core concepts of corporate and personal finance, including budgeting, investing, and risk management.

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Finance Fundamentals – Starter Quiz

1 / 10

Question 1. The principal aim of financial management is:

A) Maximize profits

B) Minimize cost

C) Maximize wealth of shareholders

D) Ensure liquidity

2 / 10

Question 2. The time value of money implies:

A) Money value stays the same

B) Money now is worth more than later

C) Inflation has no impact

D) Interest rates are not a concern

3 / 10

Question 3. Which of the following ratios can be used to assess a company's liquidity?

A) Debt-to-Equity

B) Current Ratio

C) Return on Equity

D) Inventory Turnover

4 / 10

Question 4. The capital budgeting process relates to:

A) Making decisions about short-term investments

B) Long-term investments

C) Managing daily cash flow

D) Signing checks

5 / 10

Question 5. The term “cost of capital” points to:

A) Cost of goods sold

B) Weighted average cost of capital

C) Depreciation expense

D) Lost profit due to not using the funds elsewhere

6 / 10

Question 6. A bond is classified as:

A) Equity instrument

B) Debt instrument

C) Derivative

D) Call option

7 / 10

Question 7. The process of diversification leads to a decline in:

A) Systematic risk

B) Unsystematic risk

C) Market risk

D) Beta

8 / 10

Question 8. Using the CAPM model allows one to find out:

A) Risk-free rate

B) Expected return

C) Cost of debt

D) Leverage ratio

9 / 10

Question 9. The dividend payout ratio can be computed as:

A) DPS/EPS

B) EPS/DPS

C) DPS × EPS

D) DPS – EPS

10 / 10

Question 10. The efficient market hypothesis assumes that:

A) Prices are predictable

B) All information is included in prices

C) Investors are not rational

D) Markets are not efficient

Your score is

The average score is 35%

References

Brigham, E. F., & Ehrhardt, M. C. (2019). Financial Management: Theory and Practice (16th ed.). Cengage Learning.
Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2022). Fundamentals of Corporate Finance (13th ed.). McGraw-Hill.
Investopedia
https://www.investopedia.com

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Finance Fundamentals Quiz

Introduction

Key takeaways

References

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