Hannah Wason’s Commercial Awareness Practice Test Q151-200

GO BUNNY!!!

151. What does “net income” refer to?

A) Total revenue minus total expenses B) Total assets C) Total liabilities D) Gross profit

152. Which of the following is a key feature of bonds?

A) They represent ownership in a company B) They pay interest to investors C) They are risk-free investments D) They do not have maturity dates

153. What is the purpose of a stock exchange?

A) To provide a platform for buying and selling stocks B) To regulate interest rates C) To offer loans to businesses D) To manage company dividends

154. What does “financial leverage” mean?

A) Using borrowed funds to increase investment returns B) Investing solely in equity C) Minimizing debt D) Investing in bonds

155. What is an example of a growth stock?

A) A company that pays dividends regularly B) A company that reinvests earnings for expansion C) A utility company D) A company with stable revenue

156. What is the primary purpose of a company’s annual report?

A) To provide detailed financial information to shareholders B) To outline the company's advertising strategy C) To report tax liabilities D) To manage employee benefits

157. What does “credit risk” refer to?

A) The risk of losing money due to market fluctuations B) The risk that a borrower will default on a loan C) The risk associated with interest rate changes D) The risk of currency exchange

158. Which of the following describes a recession?

A) A period of economic growth B) A significant decline in economic activity C) A time of increased consumer spending D) A sustained period of high employment

159. What does the term “return on investment” (ROI) measure?

A) The amount of money invested B) The profit or loss generated from an investment relative to the cost C) The interest earned on savings D) The total assets of a company

160. What is the primary role of a credit rating agency?

A) To provide insurance coverage A) To assess the creditworthiness of borrowers C) To regulate financial markets D) To provide investment advice

161. What is a “stock split”?

A) When a company issues more shares B) When a company increases the price of its stock C) When a company divides its existing shares into multiple new shares D) When a company merges with another company

162. Which of the following is considered a defensive stock?

A) Technology stocks B) Utilities C) Growth stocks D) Financial stocks

163. What is a “bear market”?

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

164. What is the primary risk of investing in stocks?

A) Low returns B) Market volatility C) High dividends D) Guaranteed returns

165. What does “equity” represent in finance?

A) The value of ownership in an asset after liabilities B) Total assets C) The amount of debt D) The cash flow of a company

166. What is the purpose of an initial public offering (IPO)?

A) To buy back shares from investors B) To raise capital by selling shares to the public C) To pay off debt D) To increase market share

167. Which of the following is a risk associated with bond investing?

A) Default risk B) Interest rate risk C) Inflation risk D) All of the above

168. What is the significance of a company’s market capitalization?

A) It indicates the company’s size and value in the market B) It shows the company’s profitability C) It reflects the company’s cash flow D) It measures employee performance

169. What is the primary function 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

170. What does the term “market liquidity” refer to?

A) The ease of buying and selling assets B) The amount of cash on hand C) The level of competition in the market D) The stability of asset prices

171. What is the goal of a company’s financial management?

A) To minimize costs B) To maximize shareholder wealth C) To reduce debt D) To improve employee morale

172. Which of the following is a type of alternative investment?

A) Real estate B) Stocks C) Bonds D) Mutual funds

173. What does the term “diversification” refer to?

A) Investing in a single asset B) Spreading investments across various assets to reduce risk B) Concentrating on high-risk investments C) Investing only in bonds

174. What is a “leveraged buyout”?

A) Buying a company using a significant amount of debt B) Selling off company assets C) Investing in high-risk stocks D) Merging with another company

175. What does the term “supply and demand” refer to?

A) The relationship between the availability of a product and consumer desire for it B) The cost of producing goods B) The level of government regulation C) The total number of consumers

176. What is the significance of the balance of trade?

A) It measures the level of a country's debt B) It shows the difference between exports and imports C) It indicates the stability of a currency D) It reflects the overall economic growth

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

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

178. What is a primary purpose of risk management?

A) To maximize profits B) To protect assets and income C) To increase market share D) To ensure regulatory compliance

179. What does the term “inflation” refer to?

A) A decrease in the general price level B) An increase in the general price level C) A measure of unemployment D) A type of tax

180. What is the significance of interest rates?

A) They determine the cost of borrowing B) They are fixed for all loans C) They have no impact on investments D) They are set by the government

181. What is a primary goal of monetary policy?

A) To regulate the stock market B) To control inflation and stabilize the economy C) To minimize government spending D) To maximize corporate profits

182. What is a common reason for a company to conduct a merger?

A) To reduce competition B) To expand market share C) To acquire new technology D) All of the above

183. What does “consumer confidence” indicate?

A) The willingness of consumers to spend money B) The level of savings C) The unemployment rate D) The level of inflation

184. What is a characteristic of a Ponzi scheme?

A) Legitimate investment returns B) Returns paid to earlier investors from new investors' funds C) Guaranteed profits D) Transparency in operations

185. What is the significance of corporate governance?

A) To ensure the company adheres to regulations B) To improve accountability and transparency C) To protect shareholder interests D) All of the above

186. What does “wealth management” entail?

A) Financial planning and investment advisory services B) Real estate management C) Insurance management D) Tax planning only

187. What is the primary purpose of a business plan?

A) To outline the company’s strategy for growth B) To provide a detailed financial analysis C) To secure loans from banks D) To ensure compliance with regulations

188. What is the impact of high unemployment on the economy?

A) Increased consumer spending B) Decreased consumer spending C) Economic growth D) Increased investment

189. What does the term “bull market” refer to?

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

190. What is the primary goal of financial analysis?

A) To evaluate a company’s performance and stability B) To prepare tax returns B) To sell financial products C) To increase market share

191. What is a primary reason for conducting market research?

A) To analyze competitors B) To understand consumer preferences C) To improve product quality D) All of the above

192. What is the significance of a company’s brand equity?

A) It measures customer loyalty B) It indicates the company’s profitability C) It reflects the company’s market share D) It shows the company’s operational efficiency

193. What does “price elasticity of demand” measure?

A) The sensitivity of consumer demand to price changes B) The overall demand in the market C) The income level of consumers D) The cost of production

194. What is the purpose of a SWOT analysis?

A) To evaluate a company’s internal and external factors B) To analyze financial statements C) To assess market conditions D) To determine pricing strategies

195. What does the term “market segmentation” refer to?

A) Dividing a broad target market into subsets of consumers B) Increasing production capacity C) Merging different markets D) Pricing strategies

196. What is the primary benefit of e-commerce?

A) Lower operational costs B) Access to a global market C) Improved customer service D) All of the above

197. What does the term “intellectual property” refer to?

A) Physical assets owned by a company B) Legal rights related to inventions and creations C) Financial resources available to a business C) The overall market value of a company

198. What is the role of a business consultant?

A) To provide expert advice and solutions for business challenges B) To manage the day-to-day operations of a business C) To perform audits C) To handle legal matters

199. What is the primary objective of public relations?

A) To increase sales B) To manage the company's image and reputation C) To handle financial audits D) To oversee employee relations

200. What is the significance of corporate social responsibility (CSR)?

A) It focuses solely on profit maximization B) It helps companies manage their impacts on society C) It is a requirement for government contracts D) It has no real impact on business