Fin 701 Test Questions with All Correct
Answers 2026-2027 Updated.
Basic Areas of Finance - Answer corporate finance, investments, financial institutions,
international finance
Main question in the investments area - Answer How to value financial asses such as stocks
and bonds and how to identify potential risk and rewards associated with investing in financial
assets
Practical question in the investment area - Answer What is the best way to form a prortfolio;
What is the best way to allocate financial assets
Corporate Finance - Answer Answered using finance: What long-term investments should the
firm take on? Where will we get the long-term financing to pay for the investment? How will we
manage the everyday financial activities of the firm?
examples of long term investments - Answer building, machinery, and equipment
Treasurer - Answer oversees cash management, credit management, capital expenditures, and
financial planning
Controller - Answer oversees taxes, cost accounting, financial accounting and data processing
The top financial manager within a firm - Answer Chief Financial Officer (CFO)
Capital Budgeting - Answer What long-term investments or projects should the business take
on?
Capital Structure - Answer the specific mixture of long-term debt and equity the firm uses to
finance its operations
Two concerns financial managers have - Answer How much should the firm borrow? What
mixture of debt and equity is best?
Working Capital - Answer a firm's short-term assets, such as inventory, and its short-term
liabilities, such as money owed to suppliers
, three major forms of business organization - Answer 1. Sole Proprietorship
2. Partnership
3. Corporation
Sole Proprietorship - Answer A business owned by one person, simplest type of business to
start
Partnership - Answer a business owned by two or more people
General Partnership - Answer all the partners share in the gains and losses, and all have
unlimited liability for all partnership debts
limited partnership - Answer one or more general partners will run the business and have
unlimited liability, but there will be one or more limited partners who will not actively
participate in the business
Corporation - Answer a legal "person" separate and distinct
from its owners., can borrow money and own property, can be sued and sue, can enter into
contracts
Advantages of Sole Proprietorship - Answer Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
Disadvantages of Sole Proprietorship - Answer Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
Advantages of Partnership - Answer Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
Disadvantages of Partnership - Answer Unlimited liability
Answers 2026-2027 Updated.
Basic Areas of Finance - Answer corporate finance, investments, financial institutions,
international finance
Main question in the investments area - Answer How to value financial asses such as stocks
and bonds and how to identify potential risk and rewards associated with investing in financial
assets
Practical question in the investment area - Answer What is the best way to form a prortfolio;
What is the best way to allocate financial assets
Corporate Finance - Answer Answered using finance: What long-term investments should the
firm take on? Where will we get the long-term financing to pay for the investment? How will we
manage the everyday financial activities of the firm?
examples of long term investments - Answer building, machinery, and equipment
Treasurer - Answer oversees cash management, credit management, capital expenditures, and
financial planning
Controller - Answer oversees taxes, cost accounting, financial accounting and data processing
The top financial manager within a firm - Answer Chief Financial Officer (CFO)
Capital Budgeting - Answer What long-term investments or projects should the business take
on?
Capital Structure - Answer the specific mixture of long-term debt and equity the firm uses to
finance its operations
Two concerns financial managers have - Answer How much should the firm borrow? What
mixture of debt and equity is best?
Working Capital - Answer a firm's short-term assets, such as inventory, and its short-term
liabilities, such as money owed to suppliers
, three major forms of business organization - Answer 1. Sole Proprietorship
2. Partnership
3. Corporation
Sole Proprietorship - Answer A business owned by one person, simplest type of business to
start
Partnership - Answer a business owned by two or more people
General Partnership - Answer all the partners share in the gains and losses, and all have
unlimited liability for all partnership debts
limited partnership - Answer one or more general partners will run the business and have
unlimited liability, but there will be one or more limited partners who will not actively
participate in the business
Corporation - Answer a legal "person" separate and distinct
from its owners., can borrow money and own property, can be sued and sue, can enter into
contracts
Advantages of Sole Proprietorship - Answer Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
Disadvantages of Sole Proprietorship - Answer Limited to life of owner
Equity capital limited to owner's personal wealth
Unlimited liability
Difficult to sell ownership interest
Advantages of Partnership - Answer Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
Disadvantages of Partnership - Answer Unlimited liability
