The three ways of extinguishing or extending the life of 30.

The raising of funds through the sale of a company's

the bond issue are: J- redemption, L – refunding, or O – shares of stock. H - stock financing
conversion.
The most common definition of funds when preparing
the statement of changes in financial position is M- MULTIPLE CHOICE: Write letter only, but if you feel all
working capital. choices are correct write the word "ALL".
Comparing the G - market value share with the N - book
value per share may give an indication of whether the 1. Components of capital market include which of the
stock is overpriced or underpriced. following? a) equity market; b) debt market; c)
The current ratio is equal to H - current assets divided derivative market.
by F - liabilities. 2. Asset classes example may include which of the
An E - inventory is included in computing the current following? a) equities (stocks); b) debt (bonds); c)
ratio but not the quick ratio. The account receivable cash (marketable securities)
turnover is equal to D - net credit sales divided by C - 3. An entity that acts as intermediary between
average account receivables. investors (who have money to invest) and
Return on owners’ equity is found by dividing K - net corporations (who require capital to grow and run
income by B - average stockholders' equity. their businesses). a) investment bank; b)
The price-earning ratio is equal to the A - market price commercial bank; c) savings bank.
per share divided by the I – earnings per share. 4. A document representing certain rights, liabilities
and so on, which can be transferred between parties
and which can be bought or sold. a) negotiable
16. A reserve accumulated by assuming a certain instrument; b) credit instrument; c) certificate of
designated annual decline in the value of a fixed deposits.
asset. C - allowance for depreciation 5. A financial intermediary that specializes primarily in
17. Refer to the direct extension of credit from the selling securities and underwriting the issuance of
creditors to the borrowers which are payable on new equity shares to raise capital funds. a)
installment basis. K - term loans investment bank; b) commercial bank; c) savings
18. An arrangement whereby a loan is participated in by bank
a group of financial institutions. F - loan syndication 6. A bank which specializes in deposits and commercial
19. Refers to a rental of fixed assets where the lessee loans. a) investment bank; b) commercial bank; c)
acquires possession and uses the property for a long savings bank.
period which may cover the useful life of the property. J- 7. Business capital includes which of the following? a)
financial lease equity capital; b) debt capital; c) working capital.
20. An installment sale of a property where title to the 8. The two primary sources of long-term funds are: a)
asset is also transferred by the producer to a trustee. B - stock and bond issues; b) loans and discounts; c)
conditional sale plan assets and liabilities; c) market value and earnings
21. It is the exchange of bonds for bonds, new bonds for per share.
old. L - refunding 9. Investment credit instrument include: a) bonds; b)
22. Conversion prior to maturity is done through the bill of exchange; c) open book account.
issuance of what kind of bond. D - convertible bonds 10. An investment bank may also find itself in the
23. This refers to the sale of a new security issue. A - position of: a) creditor; b) investor; c) consultant.
primary distribution 11. Investment characteristics include which of the
24. This involves the exploratory stage for both the following? a) return; b) risk; c) liquidity.
issuer and the investment banker as to sale of securities. 12. Stocks may be paid for in terms of: a) money; b)
M - origination property; c) services; d) installment.
25. An underwriting agreement is said to be on _ if the 13. Which of the following is specialized government
investment houses agree to purchase the issue from the bank? a) LBP; b) DBP; c) Philippine Amanah Bank.
corporation. N - firm basis 14. Which of the following is a government non-bank
26. The difference between net sales and cost of goods financial institutions? a) SSS; b) GSIS; c) Pag-ibig.
sold. O - gross receipts 15. What are the most commonly issued securities? a)
27. This refers to the total amount of current assets bonds; b) notes; c) commercial papers; d) stocks.
minus current liabilities. I- working capital
28. This list of accounts is restricted to a time limit of
one year, including current accounts and short term 1. profit on the sale of securities on secondary market
notes payable. E - current liabilities o. securities dealer
29. This record shows net income after the costs of 2. the central institution of capital market
operation have been deducted from gross receipts. G- a. central bank
income statement
3. income yielding paper traded on stock exchange 10. Disruption in the functions of commercial banking
h. securities does not necessarily generate ill and adverse effects
4. lends money with personal property as security to the economy. False
pledge s. pawn shop 11. Shares which, aside from its usual rights, are given
5. direct sale of securities to ultimate buyers special preferences are preferred shares. True
c. direct placement 12. Primary market implies buying and selling previously
6. market of debt instruments of any kind issued securities. False
r. bond market 13. Banking system is under the supervision of
7. financial market with fixed trading rules Department of Finance. False
i. organized market 14. Financial intermediation is indirect financing. True
8. trading of securities for immediate delivery and 15. Secondary market implies the resale and purchase
payment p. spot market of securities. True
9. buying and selling of foreign currencies
t. foreign exchange market
10. entity or person who buys and sells stocks for profit 1. Stocks considered as permanent equity capital of a
o. securities dealer corporation.
11. market where corporate issued stocks are traded 2. It is a means of financing a corporation through an
f. stock market increase in equity capital. J - Stock Financing
12. a means to create jobs and is measured in terms of 3. It refers to the aggregate ownership of a corporation.
money j. capital 4. An ultimate lender to a financial intermediary that
13. market which deals with longer term loanable funds then relends to ultimate borrowers. M - Indirect
e. capital market Finance
14. market which deals with shorter loanable funds 5. Capital stock is divided into smaller units, each of
b. Money Market which is called. F - Common stocks
15. establishments that are supervised by Central Bank 6. Shares of stocks, just like any commodity, are bought
d. banking institution and sold in what place? N - Financial Market
16. financial institution engaged in extending loans 7. A contract by an investor to buy unissued shares at
m. commercial bank an agreed price. G - Subscription
17. agency that closely monitors the banking institutions 8. Stocks which are granted to the incorporators or
a. central bank original organizers of the corporation. O - Founders'
18. engaged in underwriting of securities on guaranteed Share
basis n. investment houses 9. One who acts as intermediary between buyers and
19. issuers sell directly to public bypassing underwriter sellers but does not take title to securities traded. I -
l. direct sale Broker
20. a means to exchange with goods 10. One who is in the security business acting as a
g. money principal rather than an agent. C - Dealer
11. Market where trading is undertaken for securities
with maturity of more than one year. E - Capital
TRUE OR FALSE: (You've got a fifty-fifty chance anyway!) Market
1. The purpose of investment portfolio is solely for 12. The returns, or the profit on stock investments are in
financial gain. False the form of what? D - Dividends
2. Banking system is not the provider financial needs 13. Selling of securities by private negotiation directly to
for the country's growth and development. False investor entities or individuals. H - Private Placement
3. Corporate accumulated income from all sources is 14. A share of stock with an assigned nominal value
gathered in the sinking fund. False stated on its face. K - Par value stock
4. The SEC is the government agency tasked with 15. A share of stock without a nominal value stated on its
regulating trading in the securities market. True certificate. L - No par value stock
5. Common stockholders have lesser risk compared to
preferred stockholders. False
6. Investment bankers are sometimes referred to as
investment houses. True
7. Securities are traded in the stock exchange. True
8. Earning per share serves as an indicator of a
company's profitability. True
9. The prices of stocks and the volume of trading in the
securities markets vary from day to day depending
on supply and demand. True