Summative Test - Business Finance

ABC Company bought 10 shares of Jollibee Corporation at PHP2, 000 each on January 9, 2012. This brings his investments to PHP20, 000. What would be the result if the value of his investment goes up to PHP2, 520 per share?

• There is a decrease in shareholders wealth.

• There is an increase in shareholders wealth.

• There is increase and decrease in the shareholders wealth.

• There is no increase and no decrease in shareholders wealth.

How would you define financial management?

• It includes the vision, mission, and goals set by the top level of management

• It involves day-to-day operations carried out by the lower-level management

• It deals with the decisions that are supposed to maximize the value of shareholder’s wealth

• It is about setting the goals of the organization and identifying ways on how to achieve them

The required production of your business in the first quarter is 500,000 units. The units increased by 15% per quarter and selling price per unit is 10. Solve for the sales revenue of the second quarter.

What is the primary responsibility of the Board of Directors in a corporation?

• Setting marketing strategies

• Maximizing shareholder wealth

• Overseeing daily operations

• Implementing production plans

Suppose you are the Vice President for Finance of a company. Describe a scenario where you would make a financing decision to fund a long-term investment project.

• Issuing corporate bonds

• Reducing production costs

• Increasing marketing expenses

• Hiring more administrative staff

As a Financial Manager, how would you analyze the feasibility of a potential investment opportunity?

• By conducting market research

• By setting financial policies

•   By reducing operating costs

• By increasing shareholder dividends

Analyze the impact of changing interest rates on a company's capital structure and financing decisions.

• Interest rates have no effect on financing decisions

• Lower interest rates increase borrowing

• Higher interest rates reduce shareholder wealth

• Changing interest rates only affect marketing strategies

Evaluate the effectiveness of different financial instruments in raising capital for a startup company.

• Debt instruments are more effective than equity instruments

• Equity instruments have higher risks than debt instruments

• Both debt and equity instruments have their advantages and disadvantages

• Financial instruments have no impact on capital raising

Evaluate the role of financial intermediaries in the stability of the financial system.

• Financial intermediaries have no impact on the stability of the financial system

• Financial intermediaries mitigate risks and enhance liquidity

• Financial intermediaries only benefit large corporations

• Financial intermediaries hinder economic growth

How does financial planning contribute to a company's survival during uncertain times?

• By setting short-term goals

• By assessing the impact of actions on financial position and cash flows

• By implementing operational plans

• By relying solely on long-term financial plans