Take your time to read instructions before taking this test.

There are 40 questions which you are to answer in 15 minutes that gives you roughly 30 seconds per question.

If you can get at least 60%, you can be rest assured that you’ll ace FIN 102 exam

In a normal exam you will be asked between 40 – 60 questions but I only arranged 40 questions

Note

Do not be in a hurry to answer the questions
Do not waste time on a question you don’t know
Move as fast as possible and starting with questions that don’t have calculation first to save time
Always crosscheck
Don’t be in a hurry to submit, you are not in a competition
Don’t be scared. Getting an A is easy
Don’t be over confident, you can end up a D, E or F. Calm your blood, no be only you sabi book
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70 – 100 A

60 – 69 B

50 – 59 C

45 – 49 D

40 – 44 E

0 – 39 F

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FIN 102

1 / 40

1. What is the primary definition of investment according to Wikipedia?

A. Keeping money in a savings account without interest

B. Spending money on consumables

C. The dedication of money to purchase an asset to attain an increase in value over time

D. The purchase of luxury goods for personal enjoyment

2 / 40

2. What is risk in a business context?

A. Anything that threatens an organization's ability to generate profits at target levels.

B. The chance of achieving profits above target levels.

C. The certainty of generating high profits in the long term.

D. The likelihood of a business achieving all its targets.

3 / 40

3. Which of the following is an advantage of investing in real assets?

A. Low transaction costs

B. High liquidity

C. Provides a hedge against inflation

D. Dependent on financial market volatility

4 / 40

4. In the evolution of investment analysis and management, which period is known as the Pre-scientific Era?

A. 1900-1950

B. 1952-1980

C. 1980-date

D. 1880-1952

5 / 40

5. Which method involves calculating the time it takes to recoup the initial capital invested in a project?

A. Standard Deviation Method

B. Payback Period Method

C. Sensitivity Analysis Method

D. Expected Net Present Value Method

6 / 40

6. Which of the following best describes speculation?

A. A guaranteed method for achieving stable returns

B. A short-term, high-risk financial transaction with potential for substantial gain

C. The practice of saving money in a bank account

D. A long-term investment strategy

7 / 40

7. Which type of risk is inherent in an economy and common to all industries, and cannot be eliminated by diversification?

A. Systematic Risk

B. Liquidity Risk

C. Business Risk

D. Unsystematic Risk

8 / 40

8. Which of the following best describes probability?

A. The estimation of potential losses in an investment.

B. The degree of uncertainty in a financial decision.

C. The measure of the likelihood that a particular event will occur.

D. The degree of certainty that an event will occur.

9 / 40

9. Who is a 'Bear' in the context of speculators?

A. A speculator who anticipates a rise in the price of securities

B. A speculator who holds long-term investments

C. A speculator who applies for new shares to sell at a premium

D. A speculator who anticipates a fall in the price of securities

10 / 40

10. Which of the following is NOT a type of investment?

A. Stocks

B. Real Estate

C. Speculative Short-Selling

D. Government Bonds

11 / 40

11. Which of the following is NOT a cause of uncertainty in a business environment?

A. Customer needs

B. Trade Barriers

C. Fixed Return on Investments

D. Technological Changes

12 / 40

12. What is the relationship between risk and return in investments?

A. Lower risk results in higher return

B. Risk and return are unrelated

C. Higher risk is directly associated with higher potential return

D. Higher risk always results in lower return

13 / 40

13. What is an example of a social factor that can influence investment opportunities?

A. Aging Population

B. Fiscal Policy

C. Technological Innovation

D. Exchange rates

14 / 40

14. Which of the following is NOT considered an element of the investment environment?

A. Market intermediaries

B. Assets and investment vehicles

C. Financial markets

D. Political stability

15 / 40

15. What is the formula for the Coefficient of Variation?

A. (Standard Deviation)² / Expected Value

B. Expected Value / (Standard Deviation)²

C. Standard Deviation / Expected Value

D. Expected Value / Standard Deviation

16 / 40

16. Which type of financial asset involves a legal document that states the money lent, the amount to be paid back plus interest, and the bond’s maturity date?

A. Derivatives

B. Stocks

C. Bonds

D. Certificate of Deposit (CD)

17 / 40

17. Which of the following factors should be considered before investing?

A. The length of the investment name

B. The security of the capital invested

C. The popularity of the investment among friends

D. The color of the investment certificate

18 / 40

18. Which of the following methods considers the time value of money?

A. Accounting Rate of Return (ARR)

B. Payback Period Method

C. Net Present Value (NPV)

D. None of the options

19 / 40

19. What is the key characteristic of unsystematic risk?

A. It is common to all industries and cannot be reduced.

B. It affects the entire economy and cannot be controlled.

C. It is insurable and can be reduced by means of portfolio diversification.

D. It includes risks such as exchange and interest rates.

20 / 40

20. What does the 'time value of money' imply?

A. Money should only be invested for short periods

B. Money can earn interest over time, increasing its future value

C. Money loses its value over time regardless of interest

D. The value of money is not affected by time

21 / 40

21. What is the probability that a fair coin will come up heads in a single toss

A. 0.50

B. 0.75

C. 0.25

D. 1.00

22 / 40

22. Which of the following is NOT a limitation of the Payback Period Method?

A. It requires complex calculations and is difficult to understand

B. It fails to measure the profitability of an investment project as it does not consider all the cash inflows after the payback period

C. It does not consider the time value of money

D. It gives equal weight to returns of equal amounts even if they occur in different time periods

23 / 40

23. Which of the following is NOT a type of asset?

A. Imaginary Asset

B. Fixed Asset

C. Intanginble Asset

D. Liquid Asset

24 / 40

24. Which type of speculative transaction involves earning profit from price differences of a security in two different markets?

A. Blank Transfer

B. Cornering

C. Arbitrage

D. Margin Trading

25 / 40

25. Which of the following is NOT a common investment goal?

A. Enhancing current income

B. Saving for major expenditures

C. Accumulating retirement funds

D. Immediate consumption of goods

26 / 40

26. What is one of the primary disadvantages of speculation?

A. It guarantees high returns

B. It can lead to market manipulation and artificial price changes

C. It ensures steady income

D. It minimizes the risk of price fluctuations

27 / 40

27. Which of the following measures the dispersion of cash flows of a project from its mean value?

A. Payback period

B. Standard Deviation

C. Certainty Equivalent Method

D. Coefficient of variation

28 / 40

28. Which of the following statements is true regarding probability?

A. Probability can only be expressed as a whole number.

B. Probability is always expressed as a number between zero and one.

C. The closer the probability is to one, the less likely the event will occur.

D. The closer the probability is to zero, the more likely the event will occur.

29 / 40

29. What is an asset?

A. A resource with economic value that an individual, corporation, or country owns or controls with the expectation of providing a future benefit

B. A resource that decreases expenses but does not generate cash flow

C. A resource that always generates cash flow immediately

D. A resource with no economic value that an individual or corporation controls

30 / 40

30. Which type of risk refers to the potential loss of value in a bond due to changes in interest rates?

A. Inflation Risk

B. Business Risk

C. Interest Rate Risk

D. Volatility Risk

31 / 40

31. What distinguishes real assets from financial assets?

A. Real assets have intrinsic value, while financial assets derive their value from a contractual claim

B. Real assets do not include natural resources

C. Real assets are always more liquid than financial assets

D. Real assets are intangible, while financial assets are tangible

32 / 40

32. How is risk different from probability?

A. Risk measures potential loss, while probability measures the likelihood of an event.

B. Risk measures the likelihood of an event, while probability measures potential loss.

C. Risk is always expressed as a number between zero and one, while probability is not.

D. Risk is a measure of certainty, while probability is a measure of uncertainty.

33 / 40

33. Which of the following is a common investment goal?

A. Avoiding any form of financial planning

B. Spending all earnings

C. Buying daily groceries

D. Accumulating retirement funds

34 / 40

34. Which of the following best defines risk in a financial context?

A. The chance that an outcome or investment's actual gains will match the expected outcome.

B. The variation in the outcomes that could occur over a specified period.

C. The certainty of receiving a fixed return on an investment.

D. The guaranteed profitability of an investment.

35 / 40

35. What is 'compound interest'?

A. Interest paid on the initial deposit and any accumulated interest from previous periods

B. Interest that does not accumulate over time

C. Interest paid only on the initial deposit

D. Interest that decreases over time

36 / 40

36. Which of the following is NOT an economic factor affecting investment?

A. Interest Rates

B. Gross Domestic Products(GDP)

C. Consumer Confidence

D. Political Stability

37 / 40

37. What is the decision rule for the Profitability Index (PI)?

A. Accept projects with a PI equal to 1

B. Reject all projects regardless of PI

C. Accept projects with a PI less than 1

D. Accept projects with a PI greater than 1

38 / 40

38. Which type of investment represents ownership in a company?

A. Stocks

B. Real Estate

C. Mutual Funds

D. Bonds

39 / 40

39. What does 'liquidity' refer to in investment terms?

A. The amount of profit an investment makes

B. The level of risk involved in an investment

C. The ease of converting an investment to cash

D. The potential for capital appreciation

40 / 40

40. Which method converts uncertain cash flows to certainty-equivalent cash flows using an estimated certainty equivalent coefficient?

A. Expected Net Present Value Method

B. Certainty Equivalent Method

C. Risk-Adjusted Discount Rate Method

D. Sensitivity Analysis Method

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The average score is 60%

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