Home CBT TEST FIN 102 CBT PRACTICE

CBT TEST

FIN 102 CBT PRACTICE

Phil

July 3, 2024

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. 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

2 / 40

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

A. Interest Rates

B. Gross Domestic Products(GDP)

C. Political Stability

D. Consumer Confidence

3 / 40

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

A. Blank Transfer

B. Margin Trading

C. Cornering

D. Arbitrage

4 / 40

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

A. Reject all projects regardless of PI

B. Accept projects with a PI equal to 1

C. Accept projects with a PI less than 1

D. Accept projects with a PI greater than 1

5 / 40

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

A. 0.75

B. 0.50

C. 0.25

D. 1.00

6 / 40

6. 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. Bonds

C. Certificate of Deposit (CD)

D. Stocks

7 / 40

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

A. 1900-1950

B. 1980-date

C. 1880-1952

D. 1952-1980

8 / 40

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

A. Bonds

B. Real Estate

C. Stocks

D. Mutual Funds

9 / 40

9. What is an asset?

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

B. A resource that always generates cash flow immediately

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 decreases expenses but does not generate cash flow

10 / 40

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

A. Liquid Asset

B. Imaginary Asset

C. Fixed Asset

D. Intanginble Asset

11 / 40

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

A. High liquidity

B. Dependent on financial market volatility

C. Low transaction costs

D. Provides a hedge against inflation

12 / 40

12. 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 requires complex calculations and is difficult to understand

C. It does not consider the time value of money

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

13 / 40

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

A. Lower risk results in higher return

B. Higher risk is directly associated with higher potential return

C. Risk and return are unrelated

D. Higher risk always results in lower return

14 / 40

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

A. Technological Changes

B. Fixed Return on Investments

C. Trade Barriers

D. Customer needs

15 / 40

15. Which of the following best describes probability?

A. The degree of uncertainty in a financial decision.

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

C. The estimation of potential losses in an investment.

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

16 / 40

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

A. Systematic Risk

B. Business Risk

C. Unsystematic Risk

D. Liquidity Risk

17 / 40

17. 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.

18 / 40

18. 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

19 / 40

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

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

B. A speculator who holds long-term investments

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

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

20 / 40

20. 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 color of the investment certificate

D. The popularity of the investment among friends

21 / 40

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

A. Money loses its value over time regardless of interest

B. Money should only be invested for short periods

C. The value of money is not affected by time

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

22 / 40

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

A. The potential for capital appreciation

B. The ease of converting an investment to cash

C. The amount of profit an investment makes

D. The level of risk involved in an investment

23 / 40

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

A. Standard Deviation

B. Certainty Equivalent Method

C. Coefficient of variation

D. Payback period

24 / 40

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

A. Fiscal Policy

B. Aging Population

C. Exchange rates

D. Technological Innovation

25 / 40

25. What is the key characteristic of unsystematic risk?

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

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

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

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

26 / 40

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

A. Business Risk

B. Interest Rate Risk

C. Inflation Risk

D. Volatility Risk

27 / 40

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

A. Financial markets

B. Political stability

C. Market intermediaries

D. Assets and investment vehicles

28 / 40

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

A. Government Bonds

B. Stocks

C. Speculative Short-Selling

D. Real Estate

29 / 40

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

A. The guaranteed profitability of an investment.

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

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

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

30 / 40

30. How is risk different from probability?

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

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

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

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

31 / 40

31. 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

32 / 40

32. What is 'compound interest'?

A. Interest that does not accumulate over time

B. Interest paid only on the initial deposit

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

D. Interest that decreases over time

33 / 40

33. 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

34 / 40

34. 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

35 / 40

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

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

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. Probability can only be expressed as a whole number.

36 / 40

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

A. Spending all earnings

B. Avoiding any form of financial planning

C. Buying daily groceries

D. Accumulating retirement funds

37 / 40

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

A. Payback Period Method

B. Net Present Value (NPV)

C. Accounting Rate of Return (ARR)

D. None of the options

38 / 40

38. Which of the following best describes speculation?

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

B. A long-term investment strategy

C. A guaranteed method for achieving stable returns

D. The practice of saving money in a bank account

39 / 40

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

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

B. It guarantees high returns

C. It minimizes the risk of price fluctuations

D. It ensures steady income

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

Your score is

The average score is 63%

FIN 102 CBT PRACTICE

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