BFIN 210 Final Exam Study Guide | Business Finance Comprehensive Review & Practice
Questions 2026
Investment Pyramid Level 1 (Financial Security) - ✔✔This level represents the base of the
pyramid and consists of low risk, low return investments.
For example: cash, savings accounts, CDs, and other low-risk liquid assets (assets that can easily
be converted to cash)
Investment Pyramid Level 2 (Safety and Income) - ✔✔This level focuses on investments that
aim to provide safety and generate income.
Examples: Bonds and bond funds, which are considered safer than stocks and can provide
regular interest payments.
Investment Pyramid Level 3 (Growth) - ✔✔This level focuses on investments with higher
potential returns but also higher risk than levels 1 and 2.
Examples: Stocks and stock mutual funds, which have the potential for capital appreciation.
Aims to grow the value of your portfolio over the long term, but with a higher level of volatility
(how much the price of an investment goes up and down)
Investment Pyramid Level 4 (Speculation) - ✔✔This involves high-risk, high-return investments.
Examples: speculative stocks, options, commodities, and similar high-risk investments
Prices can be very unpredictable, and there's a chance of losing a substantial amount of money
"Banks" Deposit Type Financial Institutions - ✔✔Commercial banks, savings and loan
associations, savings banks, credit unions.
Non-Deposit Type Financial Institutions - ✔✔financial institutions such as mutual funds and
stock brokerage firms, which don't provide checking and savings accounts
,3 C's When Choosing Banks - ✔✔Costs:
- rate of interest
- minimum balance requirements
- fees
Conveniences:
- location
- available atms
- direct deposit services etc.
Considerations:
- Personal attention
- financial advice/budgeting help
- safety
Rate of Return on Saving - ✔✔Factors influencing rates of return include:
Risk - No or low risk = no or low return. (most important)
Convenience
Ease of Access
Time to Access
Minimum Balance Requirements
Cash Management Alternative - Checking Account - ✔✔Advantages:
Extremely liquid, cash available whenever needed
Safe, most are federally insured
Low or no minimum balance
, Convenient - check writing, ATM's, online transfers
Disadvantages:
Lowest rate of return
Watch out for usage fees
Opportunity cost of keeping too high a balance
Cash Management Alternative - High Yield Savings Account - ✔✔Advantages:
Liquid
Safe; most are federally insured
Slightly higher interest rate than a Checking Account
Disadvantages:
Some minimum holding time
Some minimum balance
Low interest rate
Cash Management Alternative - Certificates of Deposit (CD's) - ✔✔Characteristics:
Usually pay a fixed agreed upon rate of interest
Funds are on deposit for a "locked" period of time
Locked term could be from 30 days to several years.
Advantages:
Safe
Higher interest rate than traditional checking/savings accounts
Questions 2026
Investment Pyramid Level 1 (Financial Security) - ✔✔This level represents the base of the
pyramid and consists of low risk, low return investments.
For example: cash, savings accounts, CDs, and other low-risk liquid assets (assets that can easily
be converted to cash)
Investment Pyramid Level 2 (Safety and Income) - ✔✔This level focuses on investments that
aim to provide safety and generate income.
Examples: Bonds and bond funds, which are considered safer than stocks and can provide
regular interest payments.
Investment Pyramid Level 3 (Growth) - ✔✔This level focuses on investments with higher
potential returns but also higher risk than levels 1 and 2.
Examples: Stocks and stock mutual funds, which have the potential for capital appreciation.
Aims to grow the value of your portfolio over the long term, but with a higher level of volatility
(how much the price of an investment goes up and down)
Investment Pyramid Level 4 (Speculation) - ✔✔This involves high-risk, high-return investments.
Examples: speculative stocks, options, commodities, and similar high-risk investments
Prices can be very unpredictable, and there's a chance of losing a substantial amount of money
"Banks" Deposit Type Financial Institutions - ✔✔Commercial banks, savings and loan
associations, savings banks, credit unions.
Non-Deposit Type Financial Institutions - ✔✔financial institutions such as mutual funds and
stock brokerage firms, which don't provide checking and savings accounts
,3 C's When Choosing Banks - ✔✔Costs:
- rate of interest
- minimum balance requirements
- fees
Conveniences:
- location
- available atms
- direct deposit services etc.
Considerations:
- Personal attention
- financial advice/budgeting help
- safety
Rate of Return on Saving - ✔✔Factors influencing rates of return include:
Risk - No or low risk = no or low return. (most important)
Convenience
Ease of Access
Time to Access
Minimum Balance Requirements
Cash Management Alternative - Checking Account - ✔✔Advantages:
Extremely liquid, cash available whenever needed
Safe, most are federally insured
Low or no minimum balance
, Convenient - check writing, ATM's, online transfers
Disadvantages:
Lowest rate of return
Watch out for usage fees
Opportunity cost of keeping too high a balance
Cash Management Alternative - High Yield Savings Account - ✔✔Advantages:
Liquid
Safe; most are federally insured
Slightly higher interest rate than a Checking Account
Disadvantages:
Some minimum holding time
Some minimum balance
Low interest rate
Cash Management Alternative - Certificates of Deposit (CD's) - ✔✔Characteristics:
Usually pay a fixed agreed upon rate of interest
Funds are on deposit for a "locked" period of time
Locked term could be from 30 days to several years.
Advantages:
Safe
Higher interest rate than traditional checking/savings accounts
