FIN 102 CBT PRACTICE

Phil July 3, 2024Last Updated: December 6, 2024

0 690 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

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 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. Probability can only be expressed as a whole number.

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

2 / 40

2. 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. Spending money on consumables

C. Keeping money in a savings account without interest

D. The purchase of luxury goods for personal enjoyment

3 / 40

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

A. Accept projects with a PI equal to 1

B. Accept projects with a PI less than 1

C. Accept projects with a PI greater than 1

D. Reject all projects regardless of PI

4 / 40

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

A. The level of risk involved in an investment

B. The ease of converting an investment to cash

C. The potential for capital appreciation

D. The amount of profit an investment makes

5 / 40

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

A. Bonds

B. Stocks

C. Mutual Funds

D. Real Estate

6 / 40

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

A. Certainty Equivalent Method

B. Sensitivity Analysis Method

C. Expected Net Present Value Method

D. Risk-Adjusted Discount Rate Method

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 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

9 / 40

9. Which of the following best describes probability?

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

B. The estimation of potential losses in an investment.

C. The degree of uncertainty in a financial decision.

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

10 / 40

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

A. It minimizes the risk of price fluctuations

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

C. It guarantees high returns

D. It ensures steady income

11 / 40

11. 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. Inflation Risk

D. Business Risk

12 / 40

12. 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

13 / 40

13. 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

14 / 40

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

A. Accounting Rate of Return (ARR)

B. Payback Period Method

C. None of the options

D. Net Present Value (NPV)

15 / 40

15. What distinguishes real assets from financial assets?

A. Real assets are always more liquid than financial assets

B. Real assets do not include natural resources

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

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

16 / 40

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

A. Cornering

B. Blank Transfer

C. Margin Trading

D. Arbitrage

17 / 40

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

A. 1880-1952

B. 1952-1980

C. 1900-1950

D. 1980-date

18 / 40

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

A. Standard Deviation / Expected Value

B. Expected Value / Standard Deviation

C. (Standard Deviation)² / Expected Value

D. Expected Value / (Standard Deviation)²

19 / 40

19. 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 always results in lower return

D. Higher risk is directly associated with higher potential return

20 / 40

20. What is an asset?

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

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 with no economic value that an individual or corporation controls

21 / 40

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

A. Fixed Return on Investments

B. Technological Changes

C. Trade Barriers

D. Customer needs

22 / 40

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

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

23 / 40

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

A. Fiscal Policy

B. Exchange rates

C. Technological Innovation

D. Aging Population

24 / 40

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

A. Certainty Equivalent Method

B. Coefficient of variation

C. Payback period

D. Standard Deviation

25 / 40

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

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

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

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

D. The guaranteed profitability of an investment.

26 / 40

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

A. The popularity of the investment among friends

B. The color of the investment certificate

C. The length of the investment name

D. The security of the capital invested

27 / 40

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

A. Immediate consumption of goods

B. Accumulating retirement funds

C. Saving for major expenditures

D. Enhancing current income

28 / 40

28. 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. Bonds

B. Certificate of Deposit (CD)

C. Derivatives

D. Stocks

29 / 40

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

A. 0.50

B. 0.75

C. 1.00

D. 0.25

30 / 40

30. What is 'compound interest'?

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

B. Interest paid only on the initial deposit

C. Interest that does not accumulate over time

D. Interest that decreases over time

31 / 40

31. What is the key characteristic of unsystematic risk?

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

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

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

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

32 / 40

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

A. Spending all earnings

B. Accumulating retirement funds

C. Avoiding any form of financial planning

D. Buying daily groceries

33 / 40

33. 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 anticipates a fall in the price of securities

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

34 / 40

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

A. Intanginble Asset

B. Fixed Asset

C. Imaginary Asset

D. Liquid Asset

35 / 40

35. 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

36 / 40

36. Which of the following best describes speculation?

A. A long-term investment strategy

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

C. A guaranteed method for achieving stable returns

D. The practice of saving money in a bank account

37 / 40

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

A. Speculative Short-Selling

B. Stocks

C. Government Bonds

D. Real Estate

38 / 40

38. 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. Unsystematic Risk

D. Business Risk

39 / 40

39. What is risk in a business context?

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

B. The chance of achieving profits above target levels.

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

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

40 / 40

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

A. Financial markets

B. Market intermediaries

C. Assets and investment vehicles

D. Political stability

Your score is

The average score is 63%

Phil July 3, 2024Last Updated: December 6, 2024

0 690 1 minute read

FIN 102 CBT PRACTICE

Phil

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