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Question 1

A company's business risk depends on:

A.

Its use of debt in financing the business.

B.

How much debt a company has used.

C.

The amount of shareholder equity in the company.

D.

The risk of the company's operations and assets.

Question 2

Which of the following statements regarding general insurance companies is true?

A.

General insurance companies are more likely to acquire long-term assets than short-term securities, due to liquidity preferences.

B.

General insurance companies are more likely to acquire long-term assets because their liabilities are long-term in nature.

C.

General insurance companies tend to acquire short-term assets because they have relatively unpredictable inflows and outflows.

D.

The Reserve Bank of Australia regulates general insurance companies.

Question 3

When a finance company buys a business's accounts receivable this is called:

A.

Factoring.

B.

Floor plan finance.

C.

Trade credit.

D.

Accounts receivable financing.

Question 4

An annuity in which the first cash flow is to occur at the end of the first time period is known as a/an:

A.

Ordinary annuity

B.

Deferred annuity

C.

Perpetuity

D.

Annuity due

Question 5

Life insurance offices provide which of the following products?

A.

Income protection insurance

B.

Motor vehicle insurance

C.

Health insurance

D.

All of the given answers are correct

Question 6

Which of the following is not a role of the stock exchange?

A.

Secondary market role

B.

Derivative market role

C.

All of the given answers are correct

D.

Regulatory role

Question 7

Which of the following describes the off-balance sheet business of commitments?

A.

A form of guarantee provided by a bank to a third party, promising financial compensation for non-performance of commercial contract by a bank client

B.

An undertaking by a bank to support the financial obligations of a client

C.

The contractual financial obligations of a bank that are yet to be completed or delivered

D.

None of the given answers

Question 8

If interest rates are 8.21% per annum, compounded annually, the present value of $31000 received at the end of three years is:

A.

$2,819.17

B.

$9,549.33

C.

$24,465.80

D.

$28,647.99

Question 9

Which statement/s are true for the formation of a diversified portfolio?

A.

The positive performance of some investments offsets the negative performance of others.

B.

A diversified portfolio reduces unsystematic risk

C.

There should be a wide range of assets class such as shares, cash and properties.

D.

All of the given answers are true

Question 10

The major objectives of financial ratios are to:

A.

Evaluate the current state of the firm's operations.

B.

Show the relative strengths and weaknesses of a company as compared to other firms in the industry and leading firms in the industry.

C.

Help to show whether the firm's position has been improving or deteriorating.

D.

All of the given answers are correct