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C214 OA FINANCIAL MANAGEMENT
CONCEPTS QUESTIONS AND ANSWERS
2025
1. The goal of the corporation is to:
a. Maximize profits
b. Maximize market share
c. Maximize stock price
d. Minimize risk - correct answer- c. Maximize stock price
2. Risk premium is best described as
a. Return on risky securities
b. Compensation for risk-taking
c. Return on stocks
d. Expected return on securities - correct answer- b.
Compensation for risk-taking
3. What is the relationship between risk and required return?
a. The two are independent
b. Higher required return causes lower risk
c. Higher risk causes higher required return
d. None of the above - correct answer- c. Higher risk causes
higher required return
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4. The value of money depends upon
a. The timing of the receipt
b. The certainty of receipt
c. The size of the receipt
d. All of the above - correct answer- d. All of the above
5. What is the purpose of the SEC 10-K filing requirement?
a. Promote transparency and efficiency
b. Prevent insider trading
c. Regulate sales practices
d. Prevent monopolies - correct answer- a. Promote
transparency and efficiency
6. Which line item is not part of net working capital?
a. Inventory
b. Bonds
c. Accounts Payable
d. Accrued expenses - correct answer- b. Bonds
7. Which action causes a cash outflow?
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a. Increase in accounts payable
b. Decrease in accounts receivable
c. Increase in inventory
d. None of the above - correct answer- c. Increase in inventory
8. Which of the following is correct?
a. Gross PPE equals Net PPE plus depreciation expense
b. Gross PPE equals Net PPE plus accumulated depreciation
c. Net PPE equals Gross PPE plus depreciation expense
d. None of the above - correct answer- b.Gross PPE equals Net
PPE plus accumulated depreciation
9. Net Margin is defined as:
a. Net Income divided by sales
b. EBIT divided by sales
c. Dividends divided by net income
d. Retained earnings divided by sales. - correct answer- a. Net
Income divided by sales
10. Which item is added to the balance sheet?
a. Depreciation expense
b. Dividends paid
C214 OA FINANCIAL MANAGEMENT
CONCEPTS QUESTIONS AND ANSWERS
2025
1. The goal of the corporation is to:
a. Maximize profits
b. Maximize market share
c. Maximize stock price
d. Minimize risk - correct answer- c. Maximize stock price
2. Risk premium is best described as
a. Return on risky securities
b. Compensation for risk-taking
c. Return on stocks
d. Expected return on securities - correct answer- b.
Compensation for risk-taking
3. What is the relationship between risk and required return?
a. The two are independent
b. Higher required return causes lower risk
c. Higher risk causes higher required return
d. None of the above - correct answer- c. Higher risk causes
higher required return
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4. The value of money depends upon
a. The timing of the receipt
b. The certainty of receipt
c. The size of the receipt
d. All of the above - correct answer- d. All of the above
5. What is the purpose of the SEC 10-K filing requirement?
a. Promote transparency and efficiency
b. Prevent insider trading
c. Regulate sales practices
d. Prevent monopolies - correct answer- a. Promote
transparency and efficiency
6. Which line item is not part of net working capital?
a. Inventory
b. Bonds
c. Accounts Payable
d. Accrued expenses - correct answer- b. Bonds
7. Which action causes a cash outflow?
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a. Increase in accounts payable
b. Decrease in accounts receivable
c. Increase in inventory
d. None of the above - correct answer- c. Increase in inventory
8. Which of the following is correct?
a. Gross PPE equals Net PPE plus depreciation expense
b. Gross PPE equals Net PPE plus accumulated depreciation
c. Net PPE equals Gross PPE plus depreciation expense
d. None of the above - correct answer- b.Gross PPE equals Net
PPE plus accumulated depreciation
9. Net Margin is defined as:
a. Net Income divided by sales
b. EBIT divided by sales
c. Dividends divided by net income
d. Retained earnings divided by sales. - correct answer- a. Net
Income divided by sales
10. Which item is added to the balance sheet?
a. Depreciation expense
b. Dividends paid
