FINANCIAL ECONOMICS EXAMINATION QUESTIONS AND CORRECT ANSWER WITH EXPLANATION GRADED A+ STUDY GUIDE

FINANCIAL ECONOMICS EXAMINATION QUESTIONS AND
CORRECT ANSWER WITH EXPLANATION GRADED A+
STUDY GUIDE SOUTHERN NEW HAMPSHIRE UNIVERSITY

1. Financial economics studies:

A. Cooking systems
B. Allocation of financial resources under uncertainty
C. HR systems
D. Agriculture only
Answer: B
It focuses on financial decision-making.



2. Financial markets are used to:

A. Store food
B. Trade financial assets
C. Manage HR
D. Cook food
Answer: B
They facilitate buying and selling securities.



3. A financial asset is:

A. Physical land only
B. Claim on future cash flows
C. HR asset
D. Cooking asset
Answer: B
Includes stocks and bonds.



4. Stocks represent:

,A. Debt
B. Ownership in a company
C. HR shares
D. Cooking shares
Answer: B
Equity ownership.



5. Bonds are:

A. Ownership claims
B. Debt instruments
C. HR bonds
D. Cooking bonds
Answer: B
Loans to issuers.



6. Risk in finance means:

A. Guaranteed profit
B. Uncertainty of returns
C. HR risk
D. Cooking risk
Answer: B
Outcome variability.



7. Return is:

A. Loss only
B. Gain from investment
C. HR return
D. Cooking return
Answer: B
Profit earned.



8. Risk-return tradeoff means:

, A. No risk no return
B. Higher risk higher return
C. HR tradeoff
D. Cooking tradeoff
Answer: B
More risk = more potential reward.



9. Diversification reduces:

A. Profit
B. Risk
C. HR risk
D. Cooking risk
Answer: B
Spreading investments lowers risk.



10. Portfolio is:

A. One asset
B. Collection of investments
C. HR portfolio
D. Cooking portfolio
Answer: B
Group of assets.



11. Efficient market hypothesis states:

A. Markets are irrational
B. Prices reflect all available information
C. HR hypothesis
D. Cooking hypothesis
Answer: B
Prices adjust quickly.



12. Market efficiency means: