Financial institutions section - 3rd grade
Chapter 1: The Role of Managerial Finance
Multiple choice
1) ________ are the financial institutions responsible for the oversight and management
of all other banks.
a. Commercial banks
b. Credit unions
c. Internet banks
d. Central banks
2) _________ banks offer products to individual consumers while _________ banks
work directly with businesses.
a. Retail – commercial b. Commercial – retail c. Commercial – central d. Retail –
central.
3) Products offered at retail and commercial banks include_________.
a. Checking account b. certificate of deposit c. personal loans d. all of
the preceding
4) ___________ offer the same products and services as conventional banks, but they
do so through online platforms instead of brick and mortar locations.
a. Credit unions b. Internet banks c. Central banks d. Commercial banks
5) _________ are financial institutions that serve a specific demographic per their field
of membership, such as teachers or members of the military.
a. Commercial banks
b. Credit unions
c. Internet banks
d. Central banks
6) A function of _______ banks is to help individuals, businesses and governments raise
capital through the issuance of securities.
a. investment b. commercial c. internet d. central
7) Brokerage firms assist individuals and institutions in ___________
a. Buying securities b. selling securities c. raise capital d. both a and b
8) Ahmed wants to protect his new car against accidents, he should seek help from ____.
a. Commercial banks b. insurance companies c. credit unions d. investment banks
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Financial institutions section - 3rd grade
9) When governments face a deficit in their budget, they usually raise funds through
_______
a. Central banks b. commercial banks c. investment banks d. credit unions
10) Mohamed needs a loan to buy a new house, what is the best choice for him to get a
loan?
a. Mortgage companies b. commercial banks c. investment banks d. internet banks
11) At the personal level, finance is concerned with _________
a. individuals’ decisions about how much of their earnings they spend.
b. how much they save.
c. how they invest their savings.
d. all the above
12) At the business level, finance is concerned with _________
a. how firms raise money from investors.
b. how firms invest money in an attempt to earn a profit.
c. how firms decide whether to reinvest profits in the business or distribute them
back to investors
d. all of the above
13) Learning the techniques of good financial analysis is only helpful for businesses.
a. True
b. False
14) Careers in finance typically fall into one of two broad categories: financial services
and managerial finance.
a. True
b. False
15) Managerial finance is concerned with the design and delivery of advice and financial
products to individuals, businesses, and governments.
a. True
b. False
16) Financial services are concerned with the duties of the financial manager working in a
business.
a. True
b. False
17) Which of the following is not a duty of a financial manager?
a. Developing a financial plan
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Financial institutions section - 3rd grade
b. Raising funds for the firm’s operations
c. Evaluating proposed large expenditures
d. Developing and reporting data for measuring the performance of the firm
18) The duties of a financial manager become more complicated due to ______
a. the recent global financial crisis and subsequent responses by regulators
b. increased competition
c. technological change
d. all of the above
19) The legal form of the organization is a very important decision due to ______
a. the risks that the firm’s owners must bear
b. how the firm can raise money
c. how the firm’s profits will be taxed
d. all of the above
20) __________is a business owned by one person who operates it for his or her profit.
a. Sole proprietorship
b. Partnerships
c. Corporations
21) __________are consists of two or more owners doing business together for profit.
a. Sole proprietorship
b. Partnerships
c. Corporations
22) _________ is an entity created by law.
a. Sole proprietorship
b. Partnerships
c. Corporations
23) All the following are strengths of sole proprietorship except ______
a. Owner receives all profits
b. Low organizational costs
c. Independence
d. Lack of continuity
24) Many of sole proprietorships operate in wholesale, retail, service, and insurance
companies.
a. True
b. False
25) Partnerships are common in the insurance and real estate industries.
a. True
b. False
26) Stockholders are personally liable for the firm’s debts.
a. True
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Financial institutions section - 3rd grade
b. False
27) Stockholders are paid first.
a. True
b. False
28) Board of directors consists of “inside” directors only.
a. True
b. False
29) The simplest and best measure of stockholder wealth is the firm’s share price.
a. True
b. False
30) To determine whether a particular course of action will increase or decrease a firm’s
share price, managers must __________
a. assess cash inflows
b. assess cash outflow
c. evaluate risk
d. All of the above
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