FIN 102 CBT PRACTICE

Phil July 3, 2024

0 662 1 minute read

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

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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

Please do well to use our comment box incase there’s a message you want to pass to us

70 – 100 A

60 – 69 B

50 – 59 C

45 – 49 D

40 – 44 E

0 – 39 F

I wish you success

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FIN 102

1 / 40

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

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

B. The guaranteed profitability of an investment.

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

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

2 / 40

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

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

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

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

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

3 / 40

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

A. A speculator who holds long-term investments

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

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

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

4 / 40

4. Which of the following best describes probability?

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

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

C. The degree of uncertainty in a financial decision.

D. The estimation of potential losses in an investment.

5 / 40

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

A. Intanginble Asset

B. Imaginary Asset

C. Fixed Asset

D. Liquid Asset

6 / 40

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

A. High liquidity

B. Low transaction costs

C. Provides a hedge against inflation

D. Dependent on financial market volatility

7 / 40

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

A. Consumer Confidence

B. Political Stability

C. Interest Rates

D. Gross Domestic Products(GDP)

8 / 40

8. 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 likelihood of a business achieving all its targets.

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

9 / 40

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

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

D. It does not consider the time value of money

10 / 40

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

A. Mutual Funds

B. Stocks

C. Bonds

D. Real Estate

11 / 40

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

A. Certainty Equivalent Method

B. Expected Net Present Value Method

C. Sensitivity Analysis Method

D. Risk-Adjusted Discount Rate Method

12 / 40

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

A. Reject all projects regardless of PI

B. Accept projects with a PI less than 1

C. Accept projects with a PI equal to 1

D. Accept projects with a PI greater than 1

13 / 40

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

A. Expected Value / (Standard Deviation)²

B. Expected Value / Standard Deviation

C. (Standard Deviation)² / Expected Value

D. Standard Deviation / Expected Value

14 / 40

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

A. The value of money is not affected by time

B. Money should only be invested for short periods

C. Money loses its value over time regardless of interest

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

15 / 40

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

A. The color of the investment certificate

B. The security of the capital invested

C. The popularity of the investment among friends

D. The length of the investment name

16 / 40

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

A. Unsystematic Risk

B. Systematic Risk

C. Liquidity Risk

D. Business Risk

17 / 40

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

A. Accumulating retirement funds

B. Avoiding any form of financial planning

C. Spending all earnings

D. Buying daily groceries

18 / 40

18. 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 are intangible, while financial assets are tangible

C. Real assets do not include natural resources

D. Real assets are always more liquid than financial assets

19 / 40

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

A. The level of risk involved in an investment

B. The amount of profit an investment makes

C. The potential for capital appreciation

D. The ease of converting an investment to cash

20 / 40

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

A. Payback Period Method

B. Standard Deviation Method

C. Expected Net Present Value Method

D. Sensitivity Analysis Method

21 / 40

21. What is 'compound interest'?

A. Interest that decreases over time

B. Interest that does not accumulate over time

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

D. Interest paid only on the initial deposit

22 / 40

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

A. Cornering

B. Margin Trading

C. Arbitrage

D. Blank Transfer

23 / 40

23. 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. Stocks

B. Certificate of Deposit (CD)

C. Derivatives

D. Bonds

24 / 40

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

A. 1980-date

B. 1880-1952

C. 1952-1980

D. 1900-1950

25 / 40

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

A. Net Present Value (NPV)

B. Payback Period Method

C. None of the options

D. Accounting Rate of Return (ARR)

26 / 40

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

A. Higher risk always results in lower return

B. Higher risk is directly associated with higher potential return

C. Lower risk results in higher return

D. Risk and return are unrelated

27 / 40

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

A. Interest Rate Risk

B. Volatility Risk

C. Business Risk

D. Inflation Risk

28 / 40

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

A. It ensures steady income

B. It minimizes the risk of price fluctuations

C. It guarantees high returns

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

29 / 40

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

A. Payback period

B. Certainty Equivalent Method

C. Standard Deviation

D. Coefficient of variation

30 / 40

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

A. 1.00

B. 0.50

C. 0.75

D. 0.25

31 / 40

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

A. Technological Changes

B. Trade Barriers

C. Customer needs

D. Fixed Return on Investments

32 / 40

32. How is risk different from probability?

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

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

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

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

33 / 40

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

A. Saving for major expenditures

B. Immediate consumption of goods

C. Accumulating retirement funds

D. Enhancing current income

34 / 40

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

A. Assets and investment vehicles

B. Market intermediaries

C. Political stability

D. Financial markets

35 / 40

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

A. The purchase of luxury goods for personal enjoyment

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

C. Spending money on consumables

D. Keeping money in a savings account without interest

36 / 40

36. What is an asset?

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

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

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

D. A resource that always generates cash flow immediately

37 / 40

37. Which of the following best describes speculation?

A. A guaranteed method for achieving stable returns

B. A long-term investment strategy

C. The practice of saving money in a bank account

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

38 / 40

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

A. Stocks

B. Real Estate

C. Speculative Short-Selling

D. Government Bonds

39 / 40

39. 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

40 / 40

40. What is the key characteristic of unsystematic risk?

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

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

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

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

Your score is

The average score is 64%

Phil July 3, 2024

0 662 1 minute read

FIN 102 CBT PRACTICE

Phil

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