BUSINESS FINANCE

SECOND QUARTERLY ASSESSMENT

SY 2019-2020

Name:__________________________________________________ Date:________________________
Strand and Section:______________________________________ Score________________________

I. Read the statements carefully then write the CAPITAL letter the correct answer/s before the number. If the
answer/s is/are not on the choices, write the correct answer before the number.

1. Which is a specific period when an annuity investor is in the early stages of building up the cash value of the annuity?
A. Accumulation Phase C. Gifting Phase
B. Consolidation Phase D. Spending Phase
2. Which is the stage where retired individuals’ source of fund is their pension?
A. Accumulating Phase C. Gifting Phase
B. Consolidation Phase D. Spending Phase
3. What do we call the stage which focuses on how an individual provides support to the family members, friends, or any
charitable institution?
A. Accumulating Phase C. Gifting Phase
B. Consolidation Phase D. Spending Phase
4. The major concerns at this stage includes the ability to pay for the education of children.
A. Accumulating Phase C. Gifting Phase
B. Consolidation Phase D. Spending Phase
5. This is the basis in computing the return promised by an investment scheme.
A. Capital C. Investment
B. Interest D. Time Value of Money
6. It involves protecting the individual and his property from event risks.
A. Business Risk C. Exchange Rate Risk
B. Country Risk D. Risk Management
7. This refers to the uncertainty of returns.
A. Aversion C. Return
B. Investment D. Risk
8. What is risk aversion?
A. Risk Aversion means that individuals maximize returns for a given level of risk.
B. Risk Aversion means that individuals maximize risk if the returns are the same.
C. Risk Aversion refers to the uncertainty of returns.
D. Risk Aversion refers to the uncertainty of risks.
9. It is the choice we make when faced with simple life decisions.
A. Risk Aversion C. Risk Preference
B. Risk Investment D. Risk Return
10. This may lead the individual to seek funds haphazardly and be subjected to onerous terms by creditors.
A. Efficiency C. Liquidity
B. Illiquidity D. Profitability
11. Under the “Waste Not, Want Not – Smart Spending Matters”, individuals must identify _____________________.
A. Computations C. Priority Goals
B. Goals D. Terms
12. ____________________ requires an understanding of basic finance concepts.
A. Financial Maintenance C. Personal Financial Management
B. Financial Resources D. Resource Management
13. This is best represented by the adage, “Do not put all your eggs in one basket.”
A. Risk Management C. Risk Minimization
B. Risk Maximization D. none of these
14. _______________ and _______________ go hand and hand.
A. Capital, money C. Money, loss
 B. Management, team D. Risk, return
15. Which among the following doesn’t belong to the basic principles of personal finance management?
A. Just Do It! C. Nothing Happens Without a Plan
B. Money Games D. The Best Protection is Knowledge
16. It is the amount being charged to someone who borrows money.
A. Capital C. Investment
B. Interest D. Principal
17. What is the formula in computing the interest?
𝑃𝑟
A. 𝐼 = 𝑃𝑟𝑡 C. 𝐼 = 𝑡
𝑃 𝑃𝑡
B. 𝐼 = 𝑟𝑡 D. 𝐼 = 𝑟
18. ___________________ is the amount of money borrowed.
A. Capital C. Investment
B. Interest D. Principal
19. How to compute for the interest given the principal, rate and term?
A. Get the sum of the principal, rate and term. C. Get the product of the principal, rate and term.
B. Get the difference of the principal and the rate. D. Get the quotient of the principal and the term.
For the numbers 9 – 12
Your mother invested ₱18 000 in government securities that yields 6% annually for two years.
20. What type of interest is being illustrated?
A. Capital C. Principal
B. Compound Interest D. Simple Interest
21. How much is the principal?
A. ₱8 000 C. ₱28 000
B. ₱18 000 D. ₱38 000
22. What will be the rate?
A. 0.06 C. 6
B. 0.12 D. 12%
23. How much is the interest?
A. ₱216 C. ₱21 600
B. ₱2 160 D. ₱216 000
24. A business transaction that pays out an equal cash flow stream regularly is called ______________________.
A. Capital C. Loan Amortization
B. Investment D. Principal
25. What is the formula in computing the present value of an annuity?
1 1 1 1
A. 𝑃𝑉𝐴 = 𝐶 [𝑟 − 𝑟(1+𝑟𝑡)] C. 𝑃𝑉𝐴 = 𝐶 [𝑟 − 𝑟(1+𝑟)𝑡 ]
1 1 1
B. 𝑃𝑉𝐴 = 𝐶 [𝑟 − 𝑟(1+𝑟)] D. 𝑃𝑉𝐴 = 𝐶 [𝑟(1+𝑟𝑡)]
26. ___________________ is an annuity that requires a cash flow at the end of each year.
A. Annuity Due C. Ordinary Annuity
B. General Annuity D. Simple Annuity
27. If the cash flow happens at the start of the year, then it is called ________________________.
A. Annuity Due C. Ordinary Annuity
B. General Annuity D. Simple Annuity
28. What do we call if the cash flow stream lasts forever?
A. Annuity C. Investment
B. Interest D. Perpetuity
For questions numbers 29 – 33
An instalment plan requires the buyer to pay equal payments of ₱25 000 each year.
29. How much will be the present value of the annuity at the end of 3 years at a rate of 5%?
A. ₱68 C. ₱6 808
B. ₱680 D. ₱68 080
30. How much will be the present value of the annuity at the end of 2 years at a rate of 5%?
A. ₱4 648 C. ₱46 485
B. ₱6 485 D. ₱64 485
31. How much will be the present value of the annuity at the end of 2 years at a rate of 2%?
A. ₱4 853 C. ₱48 537.05
B. ₱48 537 D. ₱48 537.50
32. How much is the perpetuity of the situation in #18?
A. ₱500 C. ₱50 000
B. ₱5 000 D. ₱500 000
33. How much is the perpetuity of the situation in #20?
A. ₱12 500 C. ₱1 250 000
B. ₱125 000 D. ₱12 500 000
34. What is the formula for the present value of a perpetuity?
𝐴𝑛𝑛𝑢𝑖𝑡𝑦 𝑝𝑒𝑟𝑝𝑒𝑡𝑢𝑖𝑡𝑦
A. 𝑃𝑉𝑃 = C. 𝑃𝑉𝑃 =
𝑟 𝑟
𝐴𝑛𝑛𝑢𝑖𝑡𝑦 𝑝𝑒𝑟𝑝𝑒𝑡𝑢𝑖𝑡𝑦
B. 𝑃𝑉𝑃 = D. 𝑃𝑉𝑃 =
𝑡 𝑡
35. What formula will be used to compute for the equal cash flow stream?
𝑃𝑉𝐴 𝑃𝑉
a. 𝐶 = 𝑃𝑉𝐼𝐹𝐴 c. 𝐶 = 𝑃𝑉𝐼𝐹
𝑃𝑉𝐴 𝑃𝑉
b. 𝐶 = 𝑃𝑉𝐼𝐹 d. 𝐶 = 𝑃𝑉𝐼𝐹𝐴
36. What will be the formula to compute for the effective annual rate?
𝑚 𝑟 𝑚 𝑟
A. 𝐸𝐴𝑅 = (1 + 𝑟 ) C. 𝐸𝐴𝑅 = (1 + 𝑟 ) − 1
𝑟 𝑚 𝑟 𝑚
B. 𝐸𝐴𝑅 = (1 + 𝑚) D. 𝐸𝐴𝑅 = (1 + 𝑚) − 1
37. ________________ is the formula for the present value of money.
𝐹𝑉 𝐹𝑉
A. 𝑃𝑉 = (1+𝑟)𝑡 C. 𝑃𝑉 = (1+𝑟)
𝐹𝑉 𝐹𝑉
B. 𝑃𝑉 = (1+𝑟)𝑚 D. 𝑃𝑉 = (1+𝑚)
38. The future value of money is equal to ____________________.
A. 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 x (1 + 𝑟)𝑚 C. 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 x (1 + 𝑟)𝑚
B. 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑣𝑎𝑙𝑢𝑒 x (1 + 𝑟)𝑡 D. 𝑃𝑟𝑒𝑠𝑒𝑛𝑡 𝑣𝑎𝑙𝑢𝑒 x (1 + 𝑟)𝑡
39. What is the formula for simple interest?
A. 𝐼 = 𝑃𝑟𝑡 C. 𝐼 = 𝑃𝑡
B. 𝐼 = 𝑟𝑡 D. 𝐼 = 𝑃𝑟
40. _________________ is the formula for the future value of compound interest.
𝑗 𝑡
A. 𝐹 = 𝑃 (1 + 𝑚) C. 𝐹 = 𝑃(1 + 𝑖)𝑛
𝑗 𝑚
B. 𝐹 = 𝑃 (1 + 𝑚) D. 𝐹 = 𝑃(1 − 𝑖)𝑛
41. Which among the applications below is appropriate to use in computing for the finance and investment problems?
A. MS Excel C. MS Publisher
B. MS PowerPoint D. MS Word
42. This refers to the outlay of money usually for income or profit.
A. Capital C. Investment
B. Interest D. Principal
43. ___________________ includes purchasing equipment and machinery with the purpose of generating revenues
across the useful lives of these assets.
A. Asset C. Investment
B. Financial Assets Investment D. Real Assets Investment
44. This investment incudes lending money to others and purchasing fixed income instrument.
A. Asset C. Investment
B. Financial Assets Investment D. Real Assets Investment
45. _________________ is a common characteristic of the two types of investment.
A. Cash flows related to these assets occur at multiple C. Returns from these assets do not happen
time periods. overnight.
B. Cash flows related to these assets occur once. D. Returns from these assets happen overnight.
46. This type of investment is provided by financial institutions mostly banks.
A. Corporate Debt Securities C. Equity Securities
B. Deposits D. Government Securities
47. This type of investment is considered as a fixed income instrument.
A. Corporate Debt Securities C. Equity Securities
B. Deposits D. Government Securities
48. The examples of this investment are commercial papers and corporate bonds.
A. Corporate Debt Securities C. Equity Securities
B. Deposits D. Pooled Funds
49. What do we call the investment which are in the form of stocks?
A. Corporate Debt Securities C. Equity Securities
B. Deposits D. Government Securities
50. Which is an investment that an individual may invest in the shares of mutual funds.
A. Corporate Debt Securities C. Equity Securities
B. Deposits D. Pooled Funds
51. Which among the following is an example of deposits?
A. Checking Account C. Deposit Accounts
B. Corporate Bonds D. Preferred Stocks
52. Which is not an example of pooled funds?
a. Balanced Funds c. Equity Funds
b. Bond Funds d. Preferred Funds
53. According to Brown and Reilly (2014), ________________ is the current commitment of dollars for a period of time
in order to derive future payments that will compensate the investor.
a. Aversion c. Return
b. Investment d. Risk
54. The riskier the investment, the _____________________ is the required rate of return by the investor.
a. higher c. same
b. lower d. none of these
55. The following are major sources of risk except ___________________.
a. Business Risk c. Financial Risk
b. Country Risk d. Time Risk
56. __________________ is a major source of risk.
a. Exchange Rate Risk c. Time Risk
b. Liquid Risk d. None of these
57. This is a major source of risk which is related to the nature of the company’s product and its operating strategy.
a. Business Risk c. Financial Risk
b. Country Risk d. Time Risk
58. This major source of risk exist if the investment is denominated in another currency different form that of the local
currency of the investor.
a. Business Risk c. Exchange Rate Risk
b. Country Risk d. Financial Risk
59. __________________ is a major source of risk which is associated with political and economic uncertainty of a
particular business environment.
a. Business Risk c. Exchange Rate Risk
b. Country Risk d. Financial Risk
60. What do we call the risk created by the choice of capital structure?
a. Business Risk c. Exchange Rate Risk
b. Country Risk d. Financial Risk