| Unit 1: Introduction to Business Finance |
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Unit 1: Investment Decisions |
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Unit 2: Financing Decision |
| 1. What is the main purpose of financial management in a business? |
a) Maximizing employee satisfaction |
4. Which capital budgeting method considers both the time value of money and provides the net monetary gain from an investment? |
a) Payback period |
6. What does "Capitalization" refer to in financial terms? |
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b) Minimizing taxes |
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b) NPV (Net Present Value) |
a) The process of raising capital through loans |
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c) Maximizing shareholder wealth |
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c) IRR (Internal Rate of Return) |
b) The total debt of a company |
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d) Minimizing production costs |
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d) ARR (Accounting Rate of Return) |
c) The sum of a company's common stock and long-term debt |
| 2. The objective of financial management that focuses on increasing the value of the company for shareholders is known as: |
a) Profitability maximization |
5. Payback period is defined as: |
a) The time taken to earn back the initial investment |
7. The Weighted Average Cost of Capital (WACC) is the average cost of: |
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b) Revenue maximization |
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b) The time period in which the project generates maximum revenue |
a) Equity financing |
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c) Shareholder satisfaction |
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c) The time taken for a project to break even |
b) Debt financing |
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d) Shareholder wealth maximization |
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d) The time taken for a project to achieve its highest profitability |
c) Both equity and debt financing |
| 3. Time Value of Money refers to the concept that: |
a) Money has a constant value over time |
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8. Overcapitalization refers to a situation where: |
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b) Money should be spent as soon as it's earned |
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a) A company has more debt than equity |
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c) A sum of money today is worth more than the same sum in the future |
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b) A company's total capital is less than its actual needs |
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d) Money's value decreases over time |
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c) A company's assets are overvalued |
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d) A company's liabilities exceed its assets |
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