Question 1

The regulatory authority that deals with the registration of publicly traded securities in South Africa is known as
A)capital market authority.
B)ﬁnancial supervisory authority.
C)security market agency.
D)ﬁnancial services board.
E)ﬁnancial marketing unit.

Accepted Answer

The regulatory authority that deals with the registration of publicly traded securities in South Africa is the Financial Services Board (FSB). The FSB is responsible for overseeing and regulating the country's financial sector, including the registration and regulation of securities offerings and trading activities.

Question 2

The person generally directly responsible for overseeing the cash and credit functions, ﬁnancial planning, and capital expenditures is the:
A)treasurer.
B)director.
C)controller.
D)chairman of the board.
E)chief operations oﬃcer.

Accepted Answer

The treasurer is generally responsible for overseeing the cash and credit functions, financial planning, and capital expenditures.

Question 3

The decision of which lender to use and which type of long-term loan is best for a project is part of:
A)working capital management.
B)the net working capital decision.
C)capital budgeting.
D)a controller's duties.
E)the capital structure decision.

Accepted Answer

The capital structure decision involves determining the best mix of debt and equity financing for a company, which includes deciding on the types of long-term loans to use.

Question 4

Which of the following is what managers should be trying to do for the ﬁrm?
A)maximize revenue.
B)minimize expenses.
C)maximize the market value of the existing owners' equity.
D)maximize the current period's net income.
E)None of the above.

Accepted Answer

Maximizing the market value of the existing owners' equity is the ultimate goal of the firm because it takes into account both the current and future value of the company. Maximizing revenue or net income may not necessarily lead to an increase in market value if it comes at the expense of long-term growth or profitability. Minimizing expenses is important, but it is not the ultimate goal of the firm.

Question 5

The person generally directly responsible for overseeing the tax management, cost accounting, ﬁnancial accounting, and information system functions is the:
A)treasurer.
B)director.
C)controller.
D)chairman of the board.
E)chief executive oﬃcer.

Accepted Answer

The controller is typically responsible for overseeing tax management, cost accounting, financial accounting, and information system functions within a company. The treasurer is responsible for managing financial risks and overseeing financial planning and analysis. The director is a broad term that can refer to a variety of roles within a company. The chairman of the board is responsible for leading the board of directors and overseeing the overall strategy of the company. The chief executive officer is the top executive in the company and is responsible for overall management and strategic direction. None of these roles are directly responsible for the functions listed in the question except for the controller.

Question 6

The original sale of securities by governments and corporations to the general public occurs in the:
A)primary market.
B)secondary market.
C)private placement market.
D)proprietary market.
E)liquidation market.

Accepted Answer

The primary market is where the original sale of securities by governments and corporations to the general public occurs. In this market, companies raise capital by selling new stocks or bonds to investors for the first time. It is also called the new issue market. The secondary market is where these securities are then bought and sold by investors amongst themselves. The private placement market involves the sale of securities to a restricted group of institutional investors, while the proprietary market is where securities are traded by the firms themselves. The liquidation market refers to the sale of assets by a firm during bankruptcy or winding up.

Question 7

What does the ﬁnancial market mainly consist of?
A)the money and the capital markets.
B)the debt and the equity markets.
C)the primary and the secondary markets.
D)the stock markets.
E)the public listed companies.

Accepted Answer

The financial market mainly consists of the money and the capital markets.

Question 8

The management of a ﬁrm's short-term assets and liabilities is called:
A)working capital management.
B)debt management.
C)equity management.
D)capital budgeting.
E)capital structure.

Accepted Answer

The term for managing a firm's short-term assets and liabilities is working capital management. Therefore, option A is the correct answer. Option B refers to managing a firm's debt, option C refers to managing a firm's equity, option D refers to the process of identifying and evaluating potential long-term investments, and option E refers to the mix of debt and equity a firm uses to finance its operations.

Question 9

Privately placed debt and equity are not sold on the basis of private negotiations to
A)retail investors.
B)insurance companies.
C)mutual funds managers.
D)large ﬁnancial institutions
E)retail investors and mutual funds managers

Accepted Answer

Privately placed debt and equity are typically sold to sophisticated investors such as large financial institutions, insurance companies, and mutual fund managers. They are not sold to retail investors who may not have the knowledge or experience to assess the risks and rewards of such investments.

Question 10

Capital structure decisions include consideration of the: 
I.amount of long-term debt to assume.
II.cost of acquiring funds.
III.current assets and liabilities.
IV.net working capital.
A)I and II only.
B)II and III only.
C)III and IV only.
D)I, II, and IV only.
E)I, III, and IV only.

Accepted Answer

Capital structure decisions primarily focus on the mix of long-term debt and equity financing (I) and the cost of acquiring these funds (II). Current assets, liabilities, and net working capital are more related to working capital management rather than capital structure.

Question 11

How are most equities traded on the London Stock Exchange?
A)the exchange's auction system.
B)the stock exchange trading system.
C)the stock dealers.
D)the exchange's auction system, stock exchange trading system and the dealers
E)None of the above.

Accepted Answer

Most equities on the London Stock Exchange are traded through a combination of the exchange's auction system, the stock exchange trading system, and the dealers. The auction system matches buyers and sellers at a single price, while the trading system allows for continuous trading throughout the day. Dealers provide additional liquidity and facilitate trades between buyers and sellers.

Question 12

How many companies were listed on the London Stock Exchange since January 2015?
A)about 2000.
B)less than 1500.
C)exactly 1000.
D)about 1000.
E)more than 2400.

Accepted Answer

As of my last update, more than 2400 companies were listed on the London Stock Exchange. This number fluctuates due to new listings, delistings, and other market activities.

Question 13

The process of planning and managing a ﬁrm's long-term investments is called:
A)working capital management.
B)ﬁnancial depreciation.
C)agency cost analysis.
D)capital budgeting.
E)capital structure.

Accepted Answer

Planning and managing a firm's long-term investments is called capital budgeting. The other options (working capital management, financial depreciation, agency cost analysis, and capital structure) are all important financial concepts, but they do not specifically relate to long-term investments.

Question 14

When one shareholder sells equity directly to another the transaction is said to occur in the:
A)dealer market.
B)primary market.
C)secondary market.
D)OTC market.
E)NASDAQ market.

Accepted Answer

The secondary market is where existing securities are traded among investors without the involvement of the issuing company. When a shareholder sells equity directly to another shareholder, it is not considered a primary market transaction because the company is not involved in the exchange. It is also not an OTC market transaction unless it occurs outside of a formal exchange. While it could potentially occur on the NASDAQ market if the stock is listed there, the term "NASDAQ market" is not specific enough to be the best answer. The dealer market typically refers to a market where market makers buy and sell securities for their own accounts, rather than directly matching buyers and sellers like in the secondary market, so it is not the best choice in this scenario.

Question 15

Where does the assets' values of the ﬁrms appear on the Balance Sheet?
A)right hand side.
B)left hand side.
C)right hand side and left hand side.
D)it does not appear on the Balance Sheet at all.
E)right hand side or left hand side.

Accepted Answer

Assets are listed on the left-hand side of a firm's balance sheet. This is a standard accounting practice, reflecting the fundamental accounting equation: Assets = Liabilities + Equity.

Question 16

What type of companies are listed on the Alternative Investment Market?
A)foreign companies.
B)european companies.
C)asian companies.
D)smaller companies.
E)None of the above.

Accepted Answer

The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange (LSE) designed for smaller companies to list their shares in order to raise capital. Therefore, the answer is D - smaller companies. While the companies on AIM can come from various parts of the world, the common characteristic is that they are smaller and seeking to raise funds for growth and development.

Question 17

The mixture of debt and equity used by a ﬁrm to ﬁnance its operations is called:
A)working capital management.
B)ﬁnancial depreciation.
C)cost analysis.
D)capital budgeting.
E)capital structure.

Accepted Answer

The mixture of debt and equity used by a firm to finance its operations is known as its capital structure. This includes the types of instruments used to raise funds such as bonds, stocks, and short-term loans. The capital structure is important as it affects the cost of capital and the risk profile of the firm.

Question 18

What is the estimated market value of New York Stock Exchange in 2015?
A)$18 millions.
B)$25 millions
C)$10 millions.
D)$30 millions
E)$1 billions

Accepted Answer

The answer of What is the estimated market value of...

Question 19

Working capital management includes decisions concerning which of the following? 
I.trade payables
II.long-term debt
III.trade receivables
IV.inventory
A)I and II only.
B)I and III only.
C)II and IV only.
D)I, II, and III only.
E)I, III, and IV only.

Accepted Answer

Working capital management involves managing short-term assets and liabilities, which includes trade payables (I), trade receivables (III), and inventory (IV). Long-term debt (II) is not considered part of working capital management.

Question 20

Which one of the following is a capital budgeting decision?
A)Determining how much debt should be borrowed from a particular lender.
B)Deciding whether or not to open a new store.
C)Deciding when to repay a long-term debt.
D)Determining how much inventory to keep on hand.
E)Determining how much money should be kept in the checking account.

Accepted Answer

Capital budgeting decisions involve investments in new projects or expansion of existing ones, which is what opening a new store entails. A, C, D, and E are not capital budgeting decisions as they involve managing existing debt, inventory, and cash balances.

Quiz 1: Introduction to Corporate Finance

The regulatory authority that deals with the registration of publicly traded securities in South Africa is known as

The person generally directly responsible for overseeing the cash and credit functions, ﬁnancial planning, and capital expenditures is the:

The decision of which lender to use and which type of long-term loan is best for a project is part of:

Which of the following is what managers should be trying to do for the ﬁrm?

The person generally directly responsible for overseeing the tax management, cost accounting, ﬁnancial accounting, and information system functions is the:

The original sale of securities by governments and corporations to the general public occurs in the:

What does the ﬁnancial market mainly consist of?

The management of a ﬁrm's short-term assets and liabilities is called:

Privately placed debt and equity are not sold on the basis of private negotiations to

Capital structure decisions include consideration of the: I.amount of long-term debt to assume. II.cost of acquiring funds. III.current assets and liabilities. IV.net working capital.

How are most equities traded on the London Stock Exchange?

How many companies were listed on the London Stock Exchange since January 2015?

The process of planning and managing a ﬁrm's long-term investments is called:

When one shareholder sells equity directly to another the transaction is said to occur in the:

Where does the assets' values of the ﬁrms appear on the Balance Sheet?

What type of companies are listed on the Alternative Investment Market?

The mixture of debt and equity used by a ﬁrm to ﬁnance its operations is called:

What is the estimated market value of New York Stock Exchange in 2015?

Working capital management includes decisions concerning which of the following? I.trade payables II.long-term debt III.trade receivables IV.inventory

Which one of the following is a capital budgeting decision?