Hannah Wason’s Commercial Awareness Practice Test Q51-100

GO BUNNY!!!

51. What is the term for a market condition where prices are rising?

A) Bear Market B) Bull Market C) Stagnant Market D) Volatile Market

52. Which economic concept refers to the total amount of goods and services produced in a country?

A) GDP B) GNP C) NNP D) CPI

53. What is an asset that is purchased with the expectation that it will increase in value?

A) Liability B) Expense C) Investment D) Revenue

54. Which of the following describes a company that is publicly traded?

A) Privately held B) Limited liability C) Publicly held D) Non-profit

55. What does a high credit score indicate?

A) Poor financial management B) Good creditworthiness C) High debt levels D) Risky investment

56. What is a common measure of inflation?

A) CPI B) GDP C) GNP D) PPI

57. What is the primary goal of economic policy?

A) To maximize profits B) To achieve sustainable growth C) To eliminate competition B) To reduce unemployment

58. What is the definition of “liquidity”?

A) The ability to pay off debts B) The ability to convert assets into cash quickly C) The total amount of cash on hand D) The profitability of a company

59. Which of the following best describes a “bear market”?

A) A market in which prices are rising B) A market in which prices are falling C) A stable market with no fluctuations D) A market dominated by one company

60. What is a common form of capital investment for businesses?

A) Cash B) Equipment C) Real estate D) All of the above

61. What is the primary purpose of the Securities and Exchange Commission (SEC)?

A) To promote economic growth B) To protect investors C) To regulate taxes D) To manage public debt

62. Which of the following is a direct consequence of inflation?

A) Decrease in consumer prices B) Increase in purchasing power C) Decrease in currency value D) Increase in unemployment

63. What does the term “monetary policy” refer to?

A) Government spending decisions B) Taxation policies C) Control of the money supply and interest rates D) Regulation of the stock market

64. What is the effect of a strong currency on exports?

A) It makes exports cheaper B) It has no effect C) It makes exports more expensive D) It increases demand for exports

65. Which financial instrument represents ownership in a company?

A) Bond B) Stock C) Mutual Fund D) Option

66. What does “market capitalization” refer to?

A) The total market value of a company’s outstanding shares B) The total revenue of a company B) The total assets of a company C) The total liabilities of a company

67. What is the function of a financial intermediary?

A) To lend directly to borrowers B) To facilitate transactions between savers and borrowers B) To regulate the stock market C) To provide insurance services

68. What is a credit default swap?

A) A type of insurance for bondholders B) A loan made by a bank C) A financial product that pays off loans C) A method of increasing capital

69. Which of the following is a consequence of high inflation?

A) Increased purchasing power B) Decreased consumer spending C) Increased savings C) Decreased prices

70. What is the main purpose of a financial audit?

A) To promote a company’s stock B) To assess the financial statements of a company C) To increase revenue C) To manage expenses

71. What is the role of the World Bank?

A) To promote international trade B) To provide financial and technical assistance to developing countries C) To regulate financial markets D) To monitor exchange rates

72. What does “arbitrage” refer to in finance?

A) The simultaneous buying and selling of an asset to profit from price differences B) The risk of losing money on investments C) The practice of investing in high-risk stocks D) The act of managing a portfolio

73. Which of the following is NOT a component of GDP?

A) Consumption B) Investment C) Government Spending D) Currency Exchange

74. What is the primary purpose of corporate governance?

A) To maximize shareholder value B) To improve employee satisfaction C) To ensure transparency and accountability in decision-making D) To reduce costs

75. Which term refers to the market for buying and selling previously issued securities?

A) Primary Market B) Secondary Market C) Tertiary Market D) Capital Market

76. What does the term “venture capital” refer to?

A) Financing provided to start-ups and small businesses B) Funding provided by the government C) Loans offered to established businesses C) Investment in real estate

77. What is the goal of antitrust laws?

A) To promote competition and prevent monopolies B) To regulate prices C) To protect intellectual property D) To support large corporations

78. What is the effect of increased government spending on the economy?

A) Decreased GDP B) Increased GDP C) Decreased unemployment D) Both B and C

79. What does the term “subprime mortgage” refer to?

A) A mortgage for high-credit borrowers B) A mortgage for borrowers with poor credit C) A government-backed mortgage D) A type of adjustable-rate mortgage

80. What is the primary purpose of a budget?

A) To track expenses only B) To manage debt levels C) To plan income and expenditures D) To avoid investments

81. What is the purpose of a balance sheet?

A) To show the company’s cash flow B) To summarize the company’s revenues C) To provide a snapshot of assets, liabilities, and equity D) To outline the company’s expenses

82. What does the term “underwriting” refer to?

A) The process of selling shares B) The process of evaluating risk for insurance or investment C) The assessment of market conditions D) The collection of premiums

83. What is a common method used to value a business?

A) Market capitalization B) Discounted cash flow analysis C) Book value D) All of the above

84. What is a "mutual fund"?

A) A company that offers loans to individuals B) An investment vehicle that pools money from multiple investors C) A type of insurance policy C) A stock exchange

85. Which of the following is a potential risk of investing in stocks?

A) Market volatility B) Guaranteed returns C) Low liquidity D) Low taxes

86. What is the primary function of the Federal Reserve?

A) To regulate stock prices B) To control the money supply and interest rates C) To oversee insurance companies D) To manage national debt

87. What is “financial leverage”?

A) Using debt to increase the potential return on investment B) Investing in low-risk assets C) Holding large cash reserves D) None of the above

88. What is the main benefit of diversification in investment?

A) To increase returns B) To minimize risk C) To reduce volatility D) Both B and C

89. What is the primary purpose of a hedge fund?

A) To invest only in government bonds B) To minimize investment risk C) To generate high returns through various strategies D) To hold stocks long-term

90. Which of the following is a primary reason for a company to go public?

A) To increase market share B) To raise capital through equity financing C) To enhance brand recognition D) To reduce operational costs

91. What does “due diligence” mean in finance?

A) A process of evaluating a business for acquisition B) A method of increasing investment returns C) A technique for marketing products D) A system of financial reporting

92. What does “short selling” involve?

A) Selling a stock you own B) Borrowing a stock to sell it and buy it back later C) Investing in bonds D) Buying stocks for the long term

93. Which of the following is NOT a type of derivative?

A) Options B) Futures C) Stocks D) Swaps

94. What is a “bull market”?

A) A market with falling prices B) A market with rising prices C) A stagnant market D) A market dominated by one company

95. What is the primary function of a central bank?

A) To regulate financial markets B) To manage national monetary policy C) To promote economic growth D) To reduce inflation

96. What does “asset allocation” refer to?

A) The process of distributing investments across various asset categories B) The method of buying and selling stocks C) The management of cash flow D) The valuation of assets

97. Which of the following is an indicator of economic growth?

A) Decrease in GDP B) Increase in GDP C) High inflation D) Increased unemployment

98. What is “risk management” in finance?

A) The process of avoiding all risks B) The practice of identifying, assessing, and prioritizing risks C) The study of market trends D) The management of cash flow

99. What is the primary purpose of a credit rating agency?

A) To provide insurance coverage B) To assess the creditworthiness of borrowers C) To regulate the stock market D) To provide investment advice

100. What does the term “financial crisis” refer to?

A) A situation in which the financial system of a country experiences a sudden collapse B) A time when stock prices are at an all-time high C) A period of consistent economic growth D) A situation where unemployment is at its lowest