FIN2601 Extra Practice Questions and answers guaranteed pass

FIN2601 - Extra Practice Questions (With Answers)


1. What is the main objective of financial management?

A. Minimizing production costs

B. Increasing employee benefits

C. Maximizing shareholder wealth

D. Improving product quality

2. Which of the following is a capital budgeting decision?

A. Paying dividends

B. Issuing short-term debt

C. Investing in a new factory

D. Buying inventory

3. The net present value (NPV) method assumes reinvestment at:

A. Payback rate

B. Prime lending rate

C. Internal rate of return (IRR)

D. Cost of capital

4. A higher debt-to-equity ratio indicates:

A. Lower financial risk

B. Higher financial leverage

C. Higher equity financing

D. Lower return on equity

5. If the required rate of return is 12% and a project yields 15%, the NPV will be:

A. Negative

B. Zero

C. Positive

D. Undefined

6. Which method considers the time value of money?

A. Payback period

B. Net present value

C. Accounting rate of return