SELECT THE CORRECT ANSWER:

1. [S1] Financing decision is focused on how much can be reasonably withdrawn from the business to ensure that it will remain sufficiently liquid after payment to owners. [S2] Investment decisions are those which determine how available funds are committed to projects or assets. A. Both S1 and S2 are true. B. Only S2 is true. C. Both S1 and S2 are false. D. Only S1 is true.

2. Which is not an organization's response to risks? A. An organization may take the risk but not the returns that come with it. B. An organization may accept the risk if it is prepared to absorb or mitigate the impact of the risk. C. An organization may opt not to take the risk by avoiding the activity with associated risk. D. An organization may take the risk but tries to lower the impact and possibility of occurrence of the risk.

3. There is a disconnection between the values of the employees, the management and the shareholders. The following should be done to address this problem EXCEPT A. Provide an event where all individuals involved can be introduced to the revamped values statement of the entity. B. Allow departmental values to thrive and inform shareholders of these priority values. C. Realign hiring practice with the identified corporate values and avoid hiring based on employee referral. D. The management and the shareholders should agree on a written code of ethics.

4. [S1] Distribution involves purchasing of materials and sending out of finished goods. [S2] The general administrative function involves the hiring, retention, promotion and retrenchment of employees. A. Only S1 is true. B. Only S2 is true. C. Both S1 and S2 are true. D. Both S1 and S2 are false

5. Which of the following would be part of a financial manager's investment decision? A. Paying dividends to shareholders B. Paying loans C. Allocating funds for permanent current assets D. Collecting receivables from customers

6. Which of these might be part of a strategy of cost minimization? A. Increasing prices with suppliers. B. Adding more options to a product range. C. Adding layers to the organizational hierarchy. D. Outsourcing non-core activities.

7. Which of the following would result to the exchange rate decreasing from the current P50 per USD to Less than P50 per USD? A. Both higher local interest rates and more USD Remittances to the Philippines B. Higher local interest rate C. More USD remittances from US to the Philippines D. Neither higher local interest rates nor more USD Remittances to the Philippines

8. Which of these would best improve a firm's liquidity position? A. Higher need for noncash current assets on the balance sheet B. Higher capital spending C. Declaration of stock dividends D. Lower profitability

9. The following sentences relate to achieving the financial goal of cost minimization. Which of the following statements is FALSE? A. Controling costs involves addressing unfavorable cost variances. B. There is a need to determine cost. C. Savings is the end product of this financial goal. D. Prioritizing which costs to incur relates to the operating decisions of the firm only.

10. Which of the following is true about ethics and the different functions of business? A. When faced with business ethics, the stockholder will always prevail in the decision making. B. Marketing should be avoided because it can influence individuals' perceptions of and interactions with people. C. The principal can influence the actions of the agents by giving rewards or punishments. D. Externalities should always be avoided.