BUSINESS ACUMEN C203 EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026
What is one role of a financial Manager? - Answers Analyzing Major investment decisions
Which two activities are finance activities rather than accounting activities? - Answers 1. Making
capital market investments
2. Creating a financial plan
Which three sources should a business consider when seeking a long-term funding source? - Answers
1. Venture Capital
2. Public Sale of Stocks
3. Hedge Funds
In which type of security should a business invest its excess cash in anticipation of paying off the
current year's tax liability? - Answers Commercial Paper
Which role does the underwriter play in financing business operations when using the capital market
to sell securities to the public? - Answers It assumes the risk of the assessed value of the security
from the issuer.
Why should a manager use financial controls in a firm's financial plan? - Answers To determine the
accuracy of forecasted revenues, costs, and expenses
What does a CFO use in financial planning to determine the expected level of revenue for future
periods? - Answers Sales forecast plus non-sales revenue
How did the Dodd-Frank Wall Street Reform and Consumer Protection Act impact retailers? -
Answers It capped the debit card swipe fee at 21 cents.
Which two activities are prohibited by insider trading laws and should be avoided by a firm's
employees? - Answers 1. Buying stock in the public company for which the employee works based on
a conversation the employee overheard at a cocktail party between two of the company's executives
2. Selling company stock because a co-worker told the employee the company's new drug is failing in
clinical trial
Which two risks does a firm face by funding the purchase of long-term assets with short-term funding
sources? - Answers 1. Volatility of interest rates
2. Frequent Renewals
Which funding source should a firm use if it wishes to secure long-term financing while retaining all of
its equity? - Answers Long-term commercial bank loan
Which three characteristics make commercial paper a low-risk, attractive source of short-term
funding for a business? - Answers 1. It can make large amounts of money available.
2. It carries interest rates that are 1 to 2 percent less than bank loans.
3. It has a maturity that ranges between 1 and 270 days.
What should a firm do to manage the risk of using leverage when exploring long-term funding
options? - Answers Ensure that earnings remain larger than interest payments
How does a sudden shortage of a commodity product affect the immediate demand for the product
at its current price? - Answers Demand Increases
For which two purposes will the U.S. Federal Reserve System follow an expansionary monetary
policy? - Answers 1. To encourage bankers to make loans
2. To cut the cost of borrowing
Which two economic impacts should a manager anticipate when the U.S. government reduces the
number of Treasury bills, Treasury Notes, and Treasury bonds it sells? - Answers 1. A rise of interest
rates on these securities
2. An increase in overall cost of debt to private borrowers
Which two characteristics does a Just-In-Time (JIT) System have? - Answers 1. Production using JIT
reduces a firm's inventory costs.
2. A JIT system seeks to eliminate anything that does not add value in operations activities.
Which aspect of operations management do the ISO 9000 standards address? - Answers
Establishment of effective quality systems
Which manufacturing model uses technology to produce small runs of customized products cost
effectively? - Answers Flexible
Which part of the organizing process aids in effective and efficient progress toward planned goals and
often results in changes within the organization? - Answers Evaluating results
Which primary driver does management use for an organization's structure? - Answers Achievement
of company goals
What is one role of a financial Manager? - Answers Analyzing Major investment decisions
Which two activities are finance activities rather than accounting activities? - Answers 1. Making
capital market investments
2. Creating a financial plan
Which three sources should a business consider when seeking a long-term funding source? - Answers
1. Venture Capital
2. Public Sale of Stocks
3. Hedge Funds
In which type of security should a business invest its excess cash in anticipation of paying off the
current year's tax liability? - Answers Commercial Paper
Which role does the underwriter play in financing business operations when using the capital market
to sell securities to the public? - Answers It assumes the risk of the assessed value of the security
from the issuer.
Why should a manager use financial controls in a firm's financial plan? - Answers To determine the
accuracy of forecasted revenues, costs, and expenses
What does a CFO use in financial planning to determine the expected level of revenue for future
periods? - Answers Sales forecast plus non-sales revenue
How did the Dodd-Frank Wall Street Reform and Consumer Protection Act impact retailers? -
Answers It capped the debit card swipe fee at 21 cents.
Which two activities are prohibited by insider trading laws and should be avoided by a firm's
employees? - Answers 1. Buying stock in the public company for which the employee works based on
a conversation the employee overheard at a cocktail party between two of the company's executives
2. Selling company stock because a co-worker told the employee the company's new drug is failing in
clinical trial
Which two risks does a firm face by funding the purchase of long-term assets with short-term funding
sources? - Answers 1. Volatility of interest rates
2. Frequent Renewals
Which funding source should a firm use if it wishes to secure long-term financing while retaining all of
its equity? - Answers Long-term commercial bank loan
Which three characteristics make commercial paper a low-risk, attractive source of short-term
funding for a business? - Answers 1. It can make large amounts of money available.
2. It carries interest rates that are 1 to 2 percent less than bank loans.
3. It has a maturity that ranges between 1 and 270 days.
What should a firm do to manage the risk of using leverage when exploring long-term funding
options? - Answers Ensure that earnings remain larger than interest payments
How does a sudden shortage of a commodity product affect the immediate demand for the product
at its current price? - Answers Demand Increases
For which two purposes will the U.S. Federal Reserve System follow an expansionary monetary
policy? - Answers 1. To encourage bankers to make loans
2. To cut the cost of borrowing
Which two economic impacts should a manager anticipate when the U.S. government reduces the
number of Treasury bills, Treasury Notes, and Treasury bonds it sells? - Answers 1. A rise of interest
rates on these securities
2. An increase in overall cost of debt to private borrowers
Which two characteristics does a Just-In-Time (JIT) System have? - Answers 1. Production using JIT
reduces a firm's inventory costs.
2. A JIT system seeks to eliminate anything that does not add value in operations activities.
Which aspect of operations management do the ISO 9000 standards address? - Answers
Establishment of effective quality systems
Which manufacturing model uses technology to produce small runs of customized products cost
effectively? - Answers Flexible
Which part of the organizing process aids in effective and efficient progress toward planned goals and
often results in changes within the organization? - Answers Evaluating results
Which primary driver does management use for an organization's structure? - Answers Achievement
of company goals
