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AP Intermediate 2nd Year Financial Management — practice questions

Explore 22 free Financial Management questions in AP Intermediate 2nd Year Business Studies. Open each question or exercise to read its content, reference answers and available explanation.

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Financial Management questions and exercises with answers

Showing questions 1–22 of 22.

The risk of default in paying interest or repaying borrowed funds is termed:Read the answer and worked solution →Capital budgeting decisions are best described as:Read the answer and worked solution →Shareholders' funds consist of equity capital and:Read the answer and worked solution →Raising the proportion of (cheaper) debt to increase the return to equity shareholders is known as:Read the answer and worked solution →The dividend decision is concerned with:Read the answer and worked solution →Which of the following is an example of a capital budgeting decision?Read the answer and worked solution →Working capital management is concerned mainly with:Read the answer and worked solution →Increasing the use of debt in the capital structure raises:Read the answer and worked solution →The working capital requirement of a business tends to be higher when:Read the answer and worked solution →The main aim of financial planning is to:Read the answer and worked solution →The 2007 Tata Steel–Corus acquisition is used to illustrate a financing decision that affected the acquirer's:Read the answer and worked solution →Of two equally risky projects offering returns of 10% and 12%, sound financial management would normally select:Read the answer and worked solution →A firm that wishes to hold more liquid assets would tend to raise relatively more:Read the answer and worked solution →Which of the following is NOT one of the three broad finance-function decisions?Read the answer and worked solution →Which source of finance must be serviced (paid) regardless of whether the firm earns a profit?Read the answer and worked solution →Tap every financial decisionRead the answer and worked solution →True or false: financial managementRead the answer and worked solution →Money required for carrying out business activities is called:Read the answer and worked solution →Financial management is concerned with the optimal procurement and:Read the answer and worked solution →The primary aim of financial management is to maximise:Read the answer and worked solution →The three broad financial decisions are investment, financing and:Read the answer and worked solution →A long-term investment decision, such as buying a new machine, is called a:Read the answer and worked solution →

Worked practice questions

The risk of default in paying interest or repaying borrowed funds is termed:

  1. operating risk
  2. business risk
  3. market risk
  4. financial risk
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Correct answer: D. financial risk

Financial risk is the risk of default on the fixed payments (interest/principal) attached to borrowed funds.

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Capital budgeting decisions are best described as:

  1. unaffected by risk
  2. short-term and routine
  3. largely irreversible except at a huge cost
  4. easily reversible at any time
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Correct answer: C. largely irreversible except at a huge cost

Capital budgeting decisions commit large sums long-term and are irreversible except at heavy cost, so they need great care.

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Shareholders' funds consist of equity capital and:

  1. trade creditors
  2. debentures
  3. retained earnings
  4. bank loans
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Correct answer: C. retained earnings

Shareholders' funds = equity share capital + retained earnings debentures are borrowed funds.

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More Business Studies topics

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