CPA Finance - FIN Exam Practice Test
Strategy is a course of action to achieve an objective. Corporate objectives are relevant for theorganizationas a whole, relating to key factors for business success. However, objectives can be in the form of financial objectives and non-financial objectives.
Which of the following is a financial objective of anorganization?
Which of the following is a financial objective of anorganization?
Correct Answer: A
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It has been suggested that the capital asset pricing model (CAPM) includes the following assumptions:
1.Unsystematic risk can be eliminated through diversification.
2.The level of systematic risk is the same across all companies.
Which of the following combinations (true/false) is correct?
1.Unsystematic risk can be eliminated through diversification.
2.The level of systematic risk is the same across all companies.
Which of the following combinations (true/false) is correct?
Correct Answer: C
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Consider the following types of financial instruments:
1.Equity shares
2.Forward interest rate agreements
3.Convertible bonds
4.Cash deposits
Which of the above are regarded as primary financial instruments?
1.Equity shares
2.Forward interest rate agreements
3.Convertible bonds
4.Cash deposits
Which of the above are regarded as primary financial instruments?
Correct Answer: C
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Which ONE of the following statements concerning the issue of shares is correct?
Correct Answer: B
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Dorsal Co intends to make a bonus issue of ordinary shares during the forthcoming year.
Which one of the following will be affected as a result of the issue?
Which one of the following will be affected as a result of the issue?
Correct Answer: A
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An analysis of the financial statements of a business reveals the following financial ratios:
1.A higher than average inventory holding period
2.A higher than average payment period for trade payables
3.A lower than average current ratio
4.A lower than average sales to working capital ratio
Which TWO of the above is consistent with a business being over-capitalized?
1.A higher than average inventory holding period
2.A higher than average payment period for trade payables
3.A lower than average current ratio
4.A lower than average sales to working capital ratio
Which TWO of the above is consistent with a business being over-capitalized?
Correct Answer: C
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Company X pays an annual cash return to shareholders of 40 cents per share and this is expected to continue in perpetuity. The risk-free rate of return is 6% and the current average market rate of return is 10%. Company X's coefficient is 1.1.
What is the expected return from Company X, and what would be the predicted market value of company's shares?
What is the expected return from Company X, and what would be the predicted market value of company's shares?
Correct Answer: A
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Which ONE of the following methods of investment appraisal is consistent with the objective of shareholder wealthmaximization?
Correct Answer: D
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