C214 Financial Management (VCC2 Terms)/ C214
Financial Management Overview Concept Quiz Answers
COMBINED NEW 2025/2026 NEW!!
Economics is a subfield of Finance
False
Which of the following is not an example of firm capital?
Financial markets
Capital is defined as a financial asset.
True
Corporate finance is devoted to understanding various types of financial instruments.
False
Which of the following is an example of firm capital?
Cash
Corporate finance focuses on the decision making by the management of the firm.
True
What are the three important areas of finance discussed in this sec on?
Corporate Finance, Investments, and Banking/financial ins tu ons
Banks make money when interest rates they charge to borrowers are less than interest rates
they pay depositors.
False
Stocks and bonds are two types of financial instruments.
True
Stock represents ownership in a par cular company.
,True
Companies can raise capital by issuing bonds or stocks.
True
A stock is a debt instrument issued by corpora ons.
False
A Treasury bond is a debt instrument issued by corpora ons.
False
A bond is a debt instrument issued by corpora ons or governments.
True
A stock is a share of ______________ in a par cular company.
ownership
A bond is similar to a loan.
True
Primary financial markets are markets where issuers place new securi es with investors.
True
What are the two ways a syndicate can place a bond?
Compe ve sale or nego ated sale
An IPO is a seasoned equity offering.
False
An IPO occurs on the primary market.
True
Syndicates are generally made up of investment banks and other ins tu onal investors.
True
While compe ve sales allow underwriters to submit bids to purchase bonds, nego ated sales
do not.
False
,NASDAQ is the world's largest secondary financial market.
False
Auc on markets have a physical loca on.
True
Dealer markets have a physical loca on.
False
Nasdaq is an example of an auc on market.
False
Stocks that are listed on dealer markets generally have a single dealer for each stock.
False
When dealers have to compete with one another, transac on costs will generally ___________.
Decrease
Markets are where prices are determined.
True
The NYSE specialist has an objec ve to provide liquidity to the market.
True
The NYSE specialist will charge a higher price to sellers of the stock and a lower price to the
buyer of the stock.
False
The ask price of stock A is $56.75 while the bid price for stock A is $56.71. What is the bid ask
spread?
.04
The ask price of stock A is $215.54 while the bid price for stock A is $215.14. What is the bid ask
spread?
.40
The bid-ask spread is compensa on to the specialist for providing liquidity to the market.
True
, What are the two types of orders that are used by investors?
Market Orders and Limit Orders
Market orders are __________ sensi ve while limit orders are _____________ sensi ve.
me, price
A market order to buy a stock would execute at the current ask price.
True
A market order to sell a stock would execute at the current ask price.
False
A limit order to buy a stock at $101.55 would execute at the current ask price.
False
A limit order to buy a stock at $101.55 would execute when the ask price is at or below $101.55.
True
Which of the following best explains the role of prices?
All of these choices
Efficient markets are those in which prices are vola le.
False
Efficient markets will o=en have mispriced securi es.
False
Inefficient markets are those in which prices will respond quickly to new informa on.
False
Inefficient markets will o=en have mispriced securi es.
True
Because in an efficient market all available informa on is built into the price of a stock -
investment pa>erns and trends to "get rich quickly" are not easily discernable and it is difficult
to predict the price
True
In an inefficient market, prices will slowly respond to new informa on.
Financial Management Overview Concept Quiz Answers
COMBINED NEW 2025/2026 NEW!!
Economics is a subfield of Finance
False
Which of the following is not an example of firm capital?
Financial markets
Capital is defined as a financial asset.
True
Corporate finance is devoted to understanding various types of financial instruments.
False
Which of the following is an example of firm capital?
Cash
Corporate finance focuses on the decision making by the management of the firm.
True
What are the three important areas of finance discussed in this sec on?
Corporate Finance, Investments, and Banking/financial ins tu ons
Banks make money when interest rates they charge to borrowers are less than interest rates
they pay depositors.
False
Stocks and bonds are two types of financial instruments.
True
Stock represents ownership in a par cular company.
,True
Companies can raise capital by issuing bonds or stocks.
True
A stock is a debt instrument issued by corpora ons.
False
A Treasury bond is a debt instrument issued by corpora ons.
False
A bond is a debt instrument issued by corpora ons or governments.
True
A stock is a share of ______________ in a par cular company.
ownership
A bond is similar to a loan.
True
Primary financial markets are markets where issuers place new securi es with investors.
True
What are the two ways a syndicate can place a bond?
Compe ve sale or nego ated sale
An IPO is a seasoned equity offering.
False
An IPO occurs on the primary market.
True
Syndicates are generally made up of investment banks and other ins tu onal investors.
True
While compe ve sales allow underwriters to submit bids to purchase bonds, nego ated sales
do not.
False
,NASDAQ is the world's largest secondary financial market.
False
Auc on markets have a physical loca on.
True
Dealer markets have a physical loca on.
False
Nasdaq is an example of an auc on market.
False
Stocks that are listed on dealer markets generally have a single dealer for each stock.
False
When dealers have to compete with one another, transac on costs will generally ___________.
Decrease
Markets are where prices are determined.
True
The NYSE specialist has an objec ve to provide liquidity to the market.
True
The NYSE specialist will charge a higher price to sellers of the stock and a lower price to the
buyer of the stock.
False
The ask price of stock A is $56.75 while the bid price for stock A is $56.71. What is the bid ask
spread?
.04
The ask price of stock A is $215.54 while the bid price for stock A is $215.14. What is the bid ask
spread?
.40
The bid-ask spread is compensa on to the specialist for providing liquidity to the market.
True
, What are the two types of orders that are used by investors?
Market Orders and Limit Orders
Market orders are __________ sensi ve while limit orders are _____________ sensi ve.
me, price
A market order to buy a stock would execute at the current ask price.
True
A market order to sell a stock would execute at the current ask price.
False
A limit order to buy a stock at $101.55 would execute at the current ask price.
False
A limit order to buy a stock at $101.55 would execute when the ask price is at or below $101.55.
True
Which of the following best explains the role of prices?
All of these choices
Efficient markets are those in which prices are vola le.
False
Efficient markets will o=en have mispriced securi es.
False
Inefficient markets are those in which prices will respond quickly to new informa on.
False
Inefficient markets will o=en have mispriced securi es.
True
Because in an efficient market all available informa on is built into the price of a stock -
investment pa>erns and trends to "get rich quickly" are not easily discernable and it is difficult
to predict the price
True
In an inefficient market, prices will slowly respond to new informa on.
