Elementor #5705

Hannah Wason’s Commercial Awareness Practice Test Q101-150

GO BUNNY!!!

101. What does the term “liquidity risk” refer to?

A) The risk of not being able to sell an asset quickly B) The risk of investment loss C) The risk of currency fluctuations D) The risk of interest rate changes

102. What is a common method for valuing a company's stock?

A) Dividend Discount Model B) Market Capitalization C) Price-to-Earnings Ratio D) All of the above

103. What does “dividend yield” measure?

A) The annual dividends paid by a company relative to its stock price B) The total earnings of a company C) The price of the stock D) The company's market cap

104. Which of the following is considered a fixed cost?

A) Raw materials B) Rent C) Utility bills D) Sales commissions

105. What is the primary benefit of using futures contracts?

A) To speculate on price movements B) To hedge against price fluctuations C) To increase liquidity D) Both A and B

106. What is an example of an illiquid asset?

A) Cash B) Stocks C) Real estate D) Treasury bills

107. What is the primary goal of investment diversification?

A) To increase potential returns B) To reduce risk C) To maximize tax benefits D) To improve cash flow

108. Which of the following is a characteristic of a commodity?

A) It is standardized and interchangeable B) It has unique qualities C) It is primarily a service D) It cannot be traded

109. What is a “bear” in stock market terminology?

A) An investor who expects prices to rise B) An investor who expects prices to fall C) A type of stock D) A financial institution

110. What is an example of a countercyclical investment?

A) Technology stocks B) Gold C) Real estate D) Consumer goods

111. What does “capital gains tax” apply to?

A) Income from wages B) Profit from the sale of an asset C) Dividends received D) Interest income

112. Which of the following represents a company’s liabilities?

A) Cash and cash equivalents B) Total debts and obligations C) Earnings before interest and taxes D) Net income

113. What is a primary purpose of insurance?

A) To guarantee profits B) To provide financial protection against losses C) To increase revenue D) To manage risks

114. What is the role of the International Monetary Fund (IMF)?

A) To promote international trade B) To provide loans to developing countries C) To regulate currency exchange rates D) To oversee multinational corporations

115. What does a "negative yield" on a bond indicate?

A) The investor will lose money B) The bond will increase in value C) The bond is safe D) The issuer is financially stable

116. What is a primary goal of corporate finance?

A) To maximize shareholder value B) To minimize costs C) To reduce risk D) To improve employee satisfaction

117. Which type of investment typically provides the highest returns?

A) Government bonds B) Real estate C) Stocks D) Savings accounts

118. What is the purpose of a financial forecast?

A) To assess past financial performance B) To predict future financial outcomes C) To manage cash flow D) To set financial goals

119. What is the term for an economic downturn that lasts for an extended period?

A) Recession B) Depression C) Stagflation D) Boom

120. What is the purpose of a financial statement?

A) To analyze market trends B) To summarize the financial performance and position of a company C) To report tax liabilities D) To promote investments

121. What is the effect of a recession on employment levels?

A) Employment levels generally increase B) Employment levels remain stable C) Employment levels generally decrease D) Employment levels fluctuate wildly

122. What is a key characteristic of a startup company?

A) Established market presence B) High potential for rapid growth C) Steady income stream D) Low-risk investment

123. What does the term “capital structure” refer to?

A) The mix of debt and equity financing B) The total assets of a company C) The company's operational expenses D) The sales revenue of a company

124. What is a primary concern of risk management?

A) Maximizing profits B) Protecting assets and income C) Reducing operational costs D) Increasing market share

125. Which of the following is a feature of a recession?

A) Increased consumer spending B) Higher unemployment rates C) Increased business investments D) Rising inflation

126. What is the main objective of a financial audit?

A) To ensure compliance with laws B) To evaluate the efficiency of operations C) To assess the accuracy of financial statements D) To maximize profits

127. What does “interest rate risk” refer to?

A) The risk of not being able to repay a loan B) The risk that changes in interest rates will affect the value of an investment B) The risk of currency fluctuations C) The risk of default

128. What is a common characteristic of a recession?

A) Economic expansion B) Decline in consumer spending C) Increased employment D) Rising GDP

129. Which of the following is an example of a speculative investment?

A) Government bonds B) Real estate C) Penny stocks D) Blue-chip stocks

130. What is a common consequence of high inflation?

A) Increased purchasing power B) Decreased cost of living C) Increased interest rates D) Stable prices

131. What does the term “creditworthiness” refer to?

A) The likelihood of a borrower defaulting B) The ability to pay off debt B) The value of collateral C) The risk of investment

132. What is a primary function of an investment bank?

A) To provide loans to individuals B) To facilitate mergers and acquisitions C) To insure businesses D) To provide checking accounts

133. What does “operating income” refer to?

A) Revenue minus operating expenses B) Total revenue C) Revenue from investments D) Net profit

134. What does “market risk” refer to?

A) The risk of losing money due to market fluctuations B) The risk of default C) The risk associated with interest rates D) The risk of losing a major client

135. What is the goal of a financial strategy?

A) To minimize costs B) To maximize profits and shareholder value C) To reduce risk D) To comply with regulations

136. What does “collateral” refer to?

A) An asset pledged as security for a loan B) A type of investment C) A guarantee for a loan D) A government bond

137. What is a primary characteristic of a hedge fund?

A) They are regulated by the SEC B) They often use complex strategies to generate returns C) They primarily invest in bonds D) They are limited to accredited investors only

138. What is the role of an actuary?

A) To assess risks in insurance and finance B) To manage investment portfolios C) To analyze market trends D) To provide financial advice

139. Which of the following is an example of a non-renewable resource?

A) Wind energy B) Solar energy C) Natural gas D) Biomass

140. What is a characteristic of blue-chip stocks?

A) High volatility B) Low dividends C) Established companies with a history of stable earnings D) High-risk investments

141. What is the primary goal of the Federal Reserve's monetary policy?

A) To increase government spending B) To regulate the stock market C) To manage inflation and unemployment D) To promote international trade

142. What does the term “derivative” refer to in finance?

A) A security whose price is dependent on another asset B) A form of equity financing B) A type of bond C) An insurance policy

143. What is the purpose of a cash flow statement?

A) To show the company’s revenue B) To summarize cash inflows and outflows C) To analyze market trends D) To report tax liabilities

144. Which of the following is a feature of preferred stock?

A) No voting rights B) Fixed dividends C) Claims on assets before common stockholders D) All of the above

145. What is the function of the capital markets?

A) To provide short-term financing B) To facilitate the buying and selling of securities C) To issue government bonds D) To regulate stock exchanges

146. What is a common feature of mutual funds?

A) They offer high liquidity B) They require high minimum investments C) They are actively managed D) Both A and C

147. What does the term “economic indicator” refer to?

A) A statistic that reflects the overall health of the economy B) A measure of a company's financial performance C) A tool for measuring inflation D) A metric for evaluating stocks

148. What is the role of a financial analyst?

A) To manage investment portfolios B) To evaluate financial data and trends C) To provide tax advice D) To oversee corporate governance

149. What is the significance of the Dow Jones Industrial Average?

A) It measures the performance of 1000 stocks B) It is an index that tracks 30 large companies C) It is used to determine bond prices D) It measures foreign exchange rates

150. What does the term “float” refer to in finance?

A) The time between a check being written and when it clears B) The amount of shares available for trading C) The cash on hand D) The difference between assets and liabilities

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