BFIN Chapter 1 Study Guide | Business Finance Fundamentals & Key Concepts
Review 2026
The cycle of money is:
A.
the movement of funds from your savings account to your checking account and back to your
savings account.
B.
the movement of funds from a lender to a borrower and back to the lender.
C.
the movement of money from your checking account to the Internal Revenue Service and back
to you in the form of a Social Security check.
D.
the movement of money from a borrower to a lender and back to the borrower. - ANS ✔✔B
The participants in the cycle of money are: (Select all that apply.)
A.
the Federal Reserve which controls the money supply and provides money for business loans.
B.
a borrower such as a company that is using the funds for operating the business or expanding
the business.
C.
the financial institution that matches the lender with a borrower or bundles up a set of lenders
for a single borrower.
D.
, the original lender, usually an individual (or household) through direct investment or through a
financial institution. - ANS ✔✔B, C, D
The objective of every financial transaction is: (Select the best response.)
A.
to ensure that borrowers are able to make purchases.
B.
to ensure that financial institutions remain strong.
C.
to make all parties in the transaction better off.
D.
to enrich the lenders. - ANS ✔✔C
________ opens a savings account
at a ____________ with a$200 deposit. _________
loans out the$200 with other funds from other savings accounts to
a _______ who is expanding his business. The local businessman pays back the loan over time
with interest and the bank credits the savings account with interest. The individual withdraws
money from the savings account to buy a new bike. - ANS ✔✔An Individual
Local Bank
The Bank
Local Business man
In this example of the cycle of money, the benefit for the lender is:
the interest earned on the savings deposit can be used to buy a consumer good.
Review 2026
The cycle of money is:
A.
the movement of funds from your savings account to your checking account and back to your
savings account.
B.
the movement of funds from a lender to a borrower and back to the lender.
C.
the movement of money from your checking account to the Internal Revenue Service and back
to you in the form of a Social Security check.
D.
the movement of money from a borrower to a lender and back to the borrower. - ANS ✔✔B
The participants in the cycle of money are: (Select all that apply.)
A.
the Federal Reserve which controls the money supply and provides money for business loans.
B.
a borrower such as a company that is using the funds for operating the business or expanding
the business.
C.
the financial institution that matches the lender with a borrower or bundles up a set of lenders
for a single borrower.
D.
, the original lender, usually an individual (or household) through direct investment or through a
financial institution. - ANS ✔✔B, C, D
The objective of every financial transaction is: (Select the best response.)
A.
to ensure that borrowers are able to make purchases.
B.
to ensure that financial institutions remain strong.
C.
to make all parties in the transaction better off.
D.
to enrich the lenders. - ANS ✔✔C
________ opens a savings account
at a ____________ with a$200 deposit. _________
loans out the$200 with other funds from other savings accounts to
a _______ who is expanding his business. The local businessman pays back the loan over time
with interest and the bank credits the savings account with interest. The individual withdraws
money from the savings account to buy a new bike. - ANS ✔✔An Individual
Local Bank
The Bank
Local Business man
In this example of the cycle of money, the benefit for the lender is:
the interest earned on the savings deposit can be used to buy a consumer good.
