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FINANCE SKILLS FOR MANAGERS -
D076 OFFICIAL EXAM QUESTIONS
WITH ANSWERS.
1. Risk Reduction - correct answer -A series of techniques that
help reduce the amount of risk a person is exposed to by taking
a particular action.
2. Risk Retention - correct answer -A decision to take
responsibility for a particular risk.
3. Risk Separation - correct answer -A risk management
technique that involves dispersing assets geographically
instead of concentrating them in one location.
4. Risk Transfer - correct answer -A risk management technique
that involves reducing the amount of risk you are exposed to by
transferring that risk to another entity.
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5. Risk-free Rate - correct answer -The rate of return on an
investment with no risk.
6. Sales - correct answer -The top line of the income statement.
The total amount of money a business brings in (before
subtracting out any costs).
7. Seasonal Firms - correct answer -Firms whose performance
varies according to the season.
8. Secondary Market - correct answer -The financial market
where securities are traded after the initial issuance.
9. Securitization - correct answer -The process of combining
several types of contractual debt (such as mortgages) and
reselling them as a package to investors.
10. Shareholders - correct answer -A person who owns shares
of a company's stock.
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11. Simple Interest - correct answer -The interest earned only on
the principal.
12. Specialist - correct answer -A market maker on the NYSE
that holds an inventory of securities and acts as a liquidity
provider to those that wish to buy and sell.
13. Spontaneous Accounts - correct answer -Accounts that vary
naturally with sales.
14. Stakeholder - correct answer -Anyone who may be affected
by actions taken or a decision made.
15. Standard Deviation - correct answer -A measure of
dispersion of possible outcomes about the mean.
16. Steady State Growth - correct answer -The level of growth
where four key financial ratios—profitability, asset utilization,
leverage, and payout—are constant and where the firm does
not need to issue any new equity to fund the growth.
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17. Stock - correct answer -A share of ownership in a company.
18. Sunk Costs - correct answer -A cost that has already been
incurred and cannot be recovered.
19. Sustainable Growth Rate (SGR) - correct answer -The
growth rate that allows a firm to maintain its present financial
ratios without issuing new equity.
20. Syndicate - correct answer -A group of intermediaries that is
used to oversee the issuance of stocks and/or bonds.
21. Systematic Risk - correct answer -Risk that is inherent in the
economy as a whole and cannot be diversified away; also
called market risk or nondiversifiable risk.
22. Tax Strategies - correct answer -Methods used to minimize
the amount of taxes a business pays.
FINANCE SKILLS FOR MANAGERS -
D076 OFFICIAL EXAM QUESTIONS
WITH ANSWERS.
1. Risk Reduction - correct answer -A series of techniques that
help reduce the amount of risk a person is exposed to by taking
a particular action.
2. Risk Retention - correct answer -A decision to take
responsibility for a particular risk.
3. Risk Separation - correct answer -A risk management
technique that involves dispersing assets geographically
instead of concentrating them in one location.
4. Risk Transfer - correct answer -A risk management technique
that involves reducing the amount of risk you are exposed to by
transferring that risk to another entity.
, Page | 2
5. Risk-free Rate - correct answer -The rate of return on an
investment with no risk.
6. Sales - correct answer -The top line of the income statement.
The total amount of money a business brings in (before
subtracting out any costs).
7. Seasonal Firms - correct answer -Firms whose performance
varies according to the season.
8. Secondary Market - correct answer -The financial market
where securities are traded after the initial issuance.
9. Securitization - correct answer -The process of combining
several types of contractual debt (such as mortgages) and
reselling them as a package to investors.
10. Shareholders - correct answer -A person who owns shares
of a company's stock.
, Page | 3
11. Simple Interest - correct answer -The interest earned only on
the principal.
12. Specialist - correct answer -A market maker on the NYSE
that holds an inventory of securities and acts as a liquidity
provider to those that wish to buy and sell.
13. Spontaneous Accounts - correct answer -Accounts that vary
naturally with sales.
14. Stakeholder - correct answer -Anyone who may be affected
by actions taken or a decision made.
15. Standard Deviation - correct answer -A measure of
dispersion of possible outcomes about the mean.
16. Steady State Growth - correct answer -The level of growth
where four key financial ratios—profitability, asset utilization,
leverage, and payout—are constant and where the firm does
not need to issue any new equity to fund the growth.
, Page | 4
17. Stock - correct answer -A share of ownership in a company.
18. Sunk Costs - correct answer -A cost that has already been
incurred and cannot be recovered.
19. Sustainable Growth Rate (SGR) - correct answer -The
growth rate that allows a firm to maintain its present financial
ratios without issuing new equity.
20. Syndicate - correct answer -A group of intermediaries that is
used to oversee the issuance of stocks and/or bonds.
21. Systematic Risk - correct answer -Risk that is inherent in the
economy as a whole and cannot be diversified away; also
called market risk or nondiversifiable risk.
22. Tax Strategies - correct answer -Methods used to minimize
the amount of taxes a business pays.
