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CBT TEST

FIN 102 CBT PRACTICE

Phil

July 3, 2024

118

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

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 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

2 / 40

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

A. Immediate consumption of goods

B. Enhancing current income

C. Accumulating retirement funds

D. Saving for major expenditures

3 / 40

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

A. Payback period

B. Standard Deviation

C. Coefficient of variation

D. Certainty Equivalent Method

4 / 40

4. What distinguishes real assets from financial assets?

A. Real assets are always more liquid than financial assets

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

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

D. Real assets do not include natural resources

5 / 40

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

A. Arbitrage

B. Cornering

C. Margin Trading

D. Blank Transfer

6 / 40

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

A. Imaginary Asset

B. Intanginble Asset

C. Liquid Asset

D. Fixed Asset

7 / 40

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

A. It minimizes the risk of price fluctuations

B. It ensures steady income

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

D. It guarantees high returns

8 / 40

8. What is risk in a business context?

A. The chance of achieving profits above target levels.

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

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

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

9 / 40

9. What is 'compound interest'?

A. Interest that decreases over time

B. Interest that does not accumulate over time

C. Interest paid only on the initial deposit

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

10 / 40

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

A. Political Stability

B. Consumer Confidence

C. Interest Rates

D. Gross Domestic Products(GDP)

11 / 40

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

A. Volatility Risk

B. Business Risk

C. Inflation Risk

D. Interest Rate Risk

12 / 40

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

A. Fixed Return on Investments

B. Customer needs

C. Technological Changes

D. Trade Barriers

13 / 40

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

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

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

14 / 40

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

A. 1880-1952

B. 1980-date

C. 1952-1980

D. 1900-1950

15 / 40

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

A. Payback Period Method

B. Accounting Rate of Return (ARR)

C. Net Present Value (NPV)

D. None of the options

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. Certificate of Deposit (CD)

B. Bonds

C. Stocks

D. Derivatives

17 / 40

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

A. Speculative Short-Selling

B. Government Bonds

C. Real Estate

D. Stocks

18 / 40

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

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

B. Keeping money in a savings account without interest

C. Spending money on consumables

D. The purchase of luxury goods for personal enjoyment

19 / 40

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

A. Real Estate

B. Bonds

C. Mutual Funds

D. Stocks

20 / 40

20. 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 with no economic value that an individual or corporation controls

D. A resource that always generates cash flow immediately

21 / 40

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

A. Technological Innovation

B. Exchange rates

C. Aging Population

D. Fiscal Policy

22 / 40

22. 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.

23 / 40

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

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

B. Money should only be invested for short periods

C. The value of money is not affected by time

D. Money loses its value over time regardless of interest

24 / 40

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

A. Certainty Equivalent Method

B. Risk-Adjusted Discount Rate Method

C. Expected Net Present Value Method

D. Sensitivity Analysis Method

25 / 40

25. 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

26 / 40

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

A. Higher risk always results in lower return

B. Risk and return are unrelated

C. Lower risk results in higher return

D. Higher risk is directly associated with higher potential return

27 / 40

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

A. The security of the capital invested

B. The length of the investment name

C. The color of the investment certificate

D. The popularity of the investment among friends

28 / 40

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

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

B. It does not consider the time value of money

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 requires complex calculations and is difficult to understand

29 / 40

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

A. Low transaction costs

B. Provides a hedge against inflation

C. Dependent on financial market volatility

D. High liquidity

30 / 40

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

A. Business Risk

B. Liquidity Risk

C. Unsystematic Risk

D. Systematic Risk

31 / 40

31. How is risk different from probability?

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

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

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

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

32 / 40

32. 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.

33 / 40

33. 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. Sensitivity Analysis Method

D. Expected Net Present Value Method

34 / 40

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

A. Assets and investment vehicles

B. Political stability

C. Market intermediaries

D. Financial markets

35 / 40

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

A. Expected Value / Standard Deviation

B. Standard Deviation / Expected Value

C. (Standard Deviation)² / Expected Value

D. Expected Value / (Standard Deviation)²

36 / 40

36. 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 degree of certainty that an event will occur.

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

37 / 40

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

A. Avoiding any form of financial planning

B. Accumulating retirement funds

C. Buying daily groceries

D. Spending all earnings

38 / 40

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

A. Accept projects with a PI less than 1

B. Accept projects with a PI greater than 1

C. Reject all projects regardless of PI

D. Accept projects with a PI equal to 1

39 / 40

39. 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 applies for new shares to sell at a premium

C. A speculator who holds long-term investments

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

40 / 40

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

A. The amount of profit an investment makes

B. The ease of converting an investment to cash

C. The level of risk involved in an investment

D. The potential for capital appreciation

Your score is

The average score is 63%

FIN 102 CBT PRACTICE

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