Business Administration Exam Solutions
Course Introduction
Business Administration is a multidisciplinary field that equips students with essential knowledge and skills for managing organizations effectively. The course covers core principles such as management, finance, marketing, operations, human resources, and organizational behavior. Emphasizing both theory and practical application, it prepares students to analyze business environments, make strategic decisions, and lead teams. Through case studies, group projects, and real-world scenarios, learners develop critical thinking, communication, and problem-solving abilities necessary for success in diverse business settings.
Recommended Textbook
Essentials of Corporate Finance 2nd Australia Edition by Stephen Ross
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18 Chapters
871 Verified Questions
871 Flashcards
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Page 2
Chapter 1: Introduction to Financial Management
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49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/74181
Sample Questions
Q1) The goal of a financial manager should be:-
A)to maximise next year's profit
B)to minimise next year's cost
C)to maximise the value of the existing owners' equity
D)to take no risks with shareholders' investments
E)None of these are appropriate goals
Answer: C
Q2) Which one of the following applies to a general partnership?
A)The firm's operations must be controlled by a single partner.
B)Any one of the partners can be held solely liable for all of the partnership's debt.
C)The profits of the firm are taxed as a separate entity.
D)Each partner's liability for the firm's debts is limited to each partner's investment in the firm.
E)The profits of a general partnership are taxed the same as those of a corporation.
Answer: B
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3
Chapter 2: Financial Statements, Taxes, and Cash Flow
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49 Verified Questions
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Sample Questions
Q1) The Good Life Store has sales of $79 600.The cost of goods sold is $48 200 and the other costs are $18 700.Depreciation is $8300 and the tax rate is 34 per cent.What is the net income?
A)$2904
B)$8382
C)$11 204
D)$14 660
E)$16 682
Answer: A
Q2) Delivery trucks are classified as:
A)noncash expenses
B)current liabilities
C)current assets
D)tangible fixed assets
E)intangible fixed assets
Answer: D
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4
Chapter 3: Working With Financial Statements
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47 Verified Questions
47 Flashcards
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Sample Questions
Q1) Which of the following statements identify problems with financial statement analysis?
I: It is not always easy to identify a suitable benchmark for comparison purposes.
II: As many firms are conglomerates owning more than one line of business it is sometimes difficult to identify groups of firms that are directly comparable.
III: Firms in the same industry operate globally and comparison may be difficult due to different accounting standards used in the preparation of financial statements.
IV: Unusual events may affect financial performance which may give misleading signals when comparing firms' results.
A)I only
B)I,II,III and IV
C)I,II and IV
D)I and III
E)III and IV
Answer: C
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Chapter 4: Introduction to Valuation: the Time Value of Money
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Sample Questions
Q1) You and your brother are planning a large anniversary party 3 years from today for your grandparents' 50<sup>th</sup> wedding anniversary.You have estimated that you will need $2500 for this party.You can earn 3.5 per cent compounded annually on your savings.How much would you and your brother have to deposit today in one lump sum to pay for the entire party?
A)$2199.74
B)$2254.86
C)$2308.16
D)$2334.90
E)$2368.81
Q2) You expect to receive $12 000 at graduation one year from now.You plan on investing it at 8 per cent until you have $100 000.How long will you wait from now?
A)27.47 years
B)27.51 years
C)27.55 years
D)28.47 years
E)28.55 years
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Chapter 5: Discounted Cash Flow Valuation
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Sample Questions
Q1) You want to purchase a new condominium which costs $329 000.Your plan is to pay 20 per cent down in cash and finance the balance over 25 years at 6.25 per cent.What will be your monthly mortgage payment?
A)$1736.25
B)$1833.33
C)$1908.16
D)$2221.43
E)$2406.11
Q2) A pure discount loan can be defined as:
A)the present value of a stream of payments to be paid over a period of time in the future
B)the present value of a series of interest payments plus one single principal payment in the future
C)the present value of a single lump sum to be repaid at some time in the future
D)the single lump sum future value of a series of payments over a stated period of time
E)the future value of a series of interest payments plus one single loan amount paid at the beginning of the period
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Chapter 6: Interest Rates and Bond Valuation
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Sample Questions
Q1) Which party to a bill of exchange is primarily responsible for the payment of the face value to the holder at maturity?
A)the discounter
B)the borrower
C)the drawer
D)the acceptor
E)the endorser
Q2) A bond that pays no regular interest payments is called a(n)_____ bond.
A)income
B)convertible
C)exotic
D)put
E)zero coupon
Q3) The price at which a dealer will purchase a bond is called the _____ price.
A)bid
B)call
C)ask
D)put
E)face
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Page 8
Chapter 7: Equity Markets and Stock Valuation
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Sample Questions
Q1) Which one of the following generally pays a fixed dividend,receives first priority in dividend payment,and maintains the right to a dividend payment,even if that payment is deferred?
A)cumulative preference shares
B)ordinary shares
C)non-cumulative preference shares
D)promisary notes
E)corporate bonds
Q2) General Importers announced today that its next annual dividend will be $2.60 per share.After that dividend is paid,the company expects to encounter some financial difficulties and is going to suspend dividends for five years.Following the suspension period,the company expects to pay a constant annual dividend of $1.30 per share.What is the current value of this stock if the required return is 18 per cent?
A)$3.55
B)$4.88
C)$4.27
D)$3.01
E)$3.89
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9
Chapter 8: Net Present Value and Other Investment Criteria
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Sample Questions
Q1) The payback rule works best in evaluating which one of the following?
A)a low-cost project which pays back slowly
B)a low-cost project which pays back rapidly
C)a high-cost project with equal cash inflows over a long period of time
D)a high-cost project with increasing cash inflows over time
E)projects requiring significant research and development time
Q2) If an investment is producing a return that is equal to the required return,the investment's net present value will be:
A)positive
B)greater than the project's initial investment
C)zero
D)equal to the project's net profit
E)less than,or equal to,zero
Q3) The net present value:
A)decreases as the required rate of return increases
B)is equal to the initial investment when the internal rate of return is equal to the required return
C)method of analysis cannot be applied to mutually exclusive projects
D)is directly related to the discount rate
E)is unaffected by the timing of an investment's cash flows
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Chapter 9: Making Capital Investment Decisions
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Sample Questions
Q1) Which one of the following terms refers to the best option that was foregone when a particular investment is selected?
A)side effect
B)erosion
C)sunk cost
D)opportunity cost
E)marginal cost
Q2) Any changes to a firm's projected future cash flows that are caused by adding a new project are referred to as which one of the following?
A)eroded cash flows
B)deviated projections
C)incremental cash flows
D)directly impacted flows
E)assumed flows
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Chapter 10: Some Lessons From Capital Market History
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Sample Questions
Q1) Your portfolio has provided you with returns of 8.6 per cent,14.2 per cent,-3.7 per cent,and 11.4 per cent over the past four years,respectively.What is the geometric average return for this period?
A)7.25 per cent
B)7.40 per cent
C)7.57 per cent
D)7.63 per cent
E)7.78 per cent
Q2) Which one of the following supports the argument that financial markets are semistrong-form efficient?
A)Financial analysts gain a marketplace advantage by studying financial statements.
B)Only company insiders have a marketplace advantage.
C)Only historical information is reflected in the market prices of securities.
D)All information,public and private,is included in current market prices.
E)Technical analysis based on price patterns provides a marketplace advantage.
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12
Chapter 11: Risk and Return
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Sample Questions
Q1) Suppose an investor created the following portfolio: What is the expected return on this portfolio?
A)9.7%
B)10%
C)12.5%
D)15%
E)8.5%
Q2) Portfolio diversification eliminates which one of the following?
A)unsystematic risk
B)reward for bearing risk
C)total investment risk
D)portfolio risk premium
E)market risk
Q3) Based on the capital asset pricing model,a security that:
A)has a beta of 1.2 will plot as a point to the left of the overall market point
B)is over-priced will plot as a point below the security market line
C)has a beta of 1.0 should produce the risk-free rate of return
D)has a beta of 0.9 will plot as a point below the security market line
E)is under-priced will plot as a point to the left of the overall market point
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Page 13
Chapter 12: Long-Term Financing
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Sample Questions
Q1) Which one of the following represents the best estimate for a firm's pre-tax cost of debt?
A)the current coupon on the firm's existing debt
B)the firm's historical cost of capital
C)the current yield on the firm's existing debt
D)the current yield-to-maturity on the firm's existing debt
E)twice the rate of return currently offered on risk-free securities
Q2) Which one of the following is a correct statement regarding a firm's weighted average cost of capital (WACC)?
A)The WACC will decrease when the tax rate decreases for all firms that utilise debt financing.
B)A reduction in the risk level of a firm will tend to increase the firm's WACC.
C)A 5 per cent increase in a firm's debt-equity ratio will tend to increase the firm's WACC.
D)The WACC can be used as the required return for all new projects with similar risk to that of the existing firm.
E)An increase in the market risk premium will tend to decrease a firm's WACC.
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Page 14
Chapter 13: Leverage and Capital Structure
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Sample Questions
Q1) The use of borrowing by an individual to adjust his or her overall exposure to financial leverage is referred to as:
A)homemade leverage
B)capital restructuring
C)M&M Proposition II
D)financial risk management
E)M&M Proposition I
Q2) Barrier Reef Island Resorts has no debt.Its current total value is $58 million.What will the company's value be if it sells $21 million in debt securities and has a tax rate of 30 per cent,assuming that the proceeds will be used to purchase equity?
A)$51 700 000
B)$60 300 000
C)$62 300 000
D)$64 300 000
E)$65 140 000
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Chapter 14: Dividends and Dividend Policy
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Sample Questions
Q1) Which one of the following dates is the date on which the board of directors voted to pay a dividend?
A)payment date
B)settle date
C)record date
D)ex-dividend date
E)declaration date
Q2) Rural Feed Lots Ltd is an all-equity firm with positive net income.Which one of the following will result if the firm pays a cash dividend?
A)total equity will increase
B)total assets will remain constant
C)number of shares outstanding will increase
D)earnings per share will decrease
E)price-earnings ratio will decrease
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16
Chapter 15: Raising Capital
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Sample Questions
Q1) Which of the following have been offered as justification for IPO underpricing?
I.Young firms tend to be very risky.
II.The best IPOs are oversubscribed.
III.Underwriters like to avoid lawsuits.
IV.It benefits the existing shareholders.
A)I,II and III only
B)I and III only
C)I,II,III and IV
D)II,III and IV only
E)II and IV only
Q2) Northern Importers wants to raise $58 million to expand its operations into South America.The company will sell new shares in a general cash offering.The underwriters charge a 7.8 per cent fee,the administrative costs are $411 000,and the offer price is $36 per share.How many shares must be sold if the firm is to raise the funds it desires?
A)1 759 792 shares
B)1 648 315 shares
C)1 811 502 shares
D)2 051 515 shares
E)1 989 415 shares
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Page 17
Chapter 16: Short-Term Financial Planning
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Sample Questions
Q1) Which one of the following actions is indicative of a restrictive short-term financial policy?
A)expanding the number of inventory items carried
B)minimising the cash balances held by the firm
C)granting increasing amounts of credit to customers
D)investing relatively large amounts in marketable securities
E)increasing the firm's investment in the current accounts
Q2) Which one of the following statements related to a cash budget is correct?
A)The cumulative surplus is computed prior to adjusting for the minimum cash balance.
B)Financially healthy firms can have a negative quarterly net cash inflow.
C)Firms generally set the minimum cash balance at zero for planning purposes.
D)Capital expenditures are treated as a cash inflow on a cash budget.
E)A positive net cash inflow for a period indicates the cash disbursements exceed the cash collections for the period.
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18
Chapter 17: Working Capital Management
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Sample Questions
Q1) When are funds generally transferred into zero-balance accounts?
A)as needed
B)never
C)daily
D)monthly
E)weekly
Q2) Which one of the following is the need to hold cash simply as a financial reserve?
A)activity motive
B)speculative motive
C)precautionary motive
D)opportunistic motive
E)transaction motive
Q3) The economic order quantity approach states that inventory order sizes should be determined in which of the following manners?
A)computing the amount of the derived demand
B)dividing annual item sales by the carrying cost per item and multiplying by 2
C)dividing the inventory into various groups based on the value per item
D)computing the average number of items sold each month
E)equating restocking costs with carrying costs
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Page 19
Chapter 18: International Aspects of Financial Management
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Sample Questions
Q1) Which one of the following is an example of the political risks associated with foreign operations?
A)changes in foreign tax laws
B)technological changes
C)exchange rate fluctuations
D)translation exposure to exchange rate risk
E)changes in relative wage rates between the home country and the foreign country
Q2) Which one of the following terms is defined as having international operations in a world where relative currency values change?
A)exchange rate risk
B)absolute purchasing power parity
C)political risk
D)relative purchasing power parity
E)interest rate parity
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