D076 - OA TEST PREP 2026 QUESTIONS AND 100% VERIFIED ANSWERS |
GRADED A+ | GUARANTEED PASS!!
1. What are long-term financial forecasts used for?
A. Developing savings, income, and expense strategies
B. Determining short-term operating needs
C. Cash budgeting
D. Making investment and financing decisions
- answer- D. Making investment and financing decisions
Correct! Whatever growth a firm anticipates must eventually be financed one way or
another. Any investment in capital that exceeds what the firm retains from profit generates
a discretionary financing need.
2. What does a net margin of 7% indicate?
A. For every dollar of revenue, 7 cents remain for the debt holders and equity holders after
all other costs are covered.
B. For every dollar of total assets, 7 cents are generated as sales.
C. For every dollar of fixed assets, 7 cents are generated in sales.
D. For every dollar of revenue, 7 cents remain for the equity holders after all
other costs are covered.
- answer- D. For every dollar of revenue, 7 cents remain for the equity holders after all other
costs are covered.
Correct! Net margin tells us the percentage of sales that will become net income, which is
the amount remaining for the equity holders.
3. Which area of finance involves deciding which assets to invest in to create wealth in the
future?
,A. Financial management
B. Asset pricing
C. Financial institutions
D. Investments
- answer- D. Investments
Correct! This area involves deciding which assets to invest in to create wealth in the future.
4. What is the main goal of a firm?
A. To make investment decisions
B. To circulate money in the economy
C. To maximize owner wealth
D. To make decisions on how to finance projects
- answer- C. To maximize owner wealth
Correct! The main goal of a firm is to maximize owner wealth, and the financial manager
should make decisions based on this goal.
5. What are financial managers doing if they evaluate whether it is worth spending money
on research and development for a new product?
A. Managing working capital
B. Making a financing decision
C. Making an investment decision
D. Implementing a financial policy
- answer- C. Making an investment decision
Correct! The financial manager assesses the costs and benefits of potential investments in
order to wisely use the investors' money.
6. Which type of financial market is where securities such as stocks and bonds are traded
after their initial issuance?
A. The initial public offering
B. The secondary financial market
,C. The primary financial market
D. The dealer market
- answer- B. The secondary financial market
Correct! Financial securities are first sold in the primary financial market and then traded
among investors in the secondary financial market.
7. What type of financial institution is an insurance company?
A. Depository
B. Investment
C. Contractual
D. Circulatory
- answer- C. Contractual
Correct! Insurance companies are contractual savings institutions.
8. Which financial institution invests funds contributed by a company to provide retirement
funds for the company's employees?
A. Mutual fund
B. Insurance
C. Pension fund
D. Central bank
- answer- C. Pension fund
Correct! This is the role of pension funds.
9. Personal income is which type of economic indicator?
A. Coincident
B. Lagging
C. Unifying
D. Leading
- answer- A. Coincident
Correct! Coincident indicators change as the economy changes.
, 10. Which term refers to something that conforms with accepted standards of conduct that
guide a person's behavior?
A. Moral
B. Standard
C. Legal
D. Ethical
- answer- D. Ethical
Correct! Ethical refers to the accepted standards of conduct that guide a person's behavior
11. What is the second step in finding a solution to an ethical dilemma?
A. Consider the consequences that may come from the action.
B. Identify and define the problem.
C. Consider alternative courses of action.
D. Calculate the value added to the company.
- answer- C. Consider alternative courses of action
Correct! First, identify and define the problem. Then, consider alternative courses of action.
12. How can agency problems be reduced through corporate control?
A. Setting strict goals
B. Accounting manipulations
C. Executive compensation
D. Acquisition of a foreign subsidiary
- answer- C. Executive compensation
Correct! By compensating the management team with stocks and stock options,
management may be willing to take on riskier projects. This creates more value for the
owners because riskier projects will increase the value of financial securities.
13. What are the main services offered by financial institutions?
GRADED A+ | GUARANTEED PASS!!
1. What are long-term financial forecasts used for?
A. Developing savings, income, and expense strategies
B. Determining short-term operating needs
C. Cash budgeting
D. Making investment and financing decisions
- answer- D. Making investment and financing decisions
Correct! Whatever growth a firm anticipates must eventually be financed one way or
another. Any investment in capital that exceeds what the firm retains from profit generates
a discretionary financing need.
2. What does a net margin of 7% indicate?
A. For every dollar of revenue, 7 cents remain for the debt holders and equity holders after
all other costs are covered.
B. For every dollar of total assets, 7 cents are generated as sales.
C. For every dollar of fixed assets, 7 cents are generated in sales.
D. For every dollar of revenue, 7 cents remain for the equity holders after all
other costs are covered.
- answer- D. For every dollar of revenue, 7 cents remain for the equity holders after all other
costs are covered.
Correct! Net margin tells us the percentage of sales that will become net income, which is
the amount remaining for the equity holders.
3. Which area of finance involves deciding which assets to invest in to create wealth in the
future?
,A. Financial management
B. Asset pricing
C. Financial institutions
D. Investments
- answer- D. Investments
Correct! This area involves deciding which assets to invest in to create wealth in the future.
4. What is the main goal of a firm?
A. To make investment decisions
B. To circulate money in the economy
C. To maximize owner wealth
D. To make decisions on how to finance projects
- answer- C. To maximize owner wealth
Correct! The main goal of a firm is to maximize owner wealth, and the financial manager
should make decisions based on this goal.
5. What are financial managers doing if they evaluate whether it is worth spending money
on research and development for a new product?
A. Managing working capital
B. Making a financing decision
C. Making an investment decision
D. Implementing a financial policy
- answer- C. Making an investment decision
Correct! The financial manager assesses the costs and benefits of potential investments in
order to wisely use the investors' money.
6. Which type of financial market is where securities such as stocks and bonds are traded
after their initial issuance?
A. The initial public offering
B. The secondary financial market
,C. The primary financial market
D. The dealer market
- answer- B. The secondary financial market
Correct! Financial securities are first sold in the primary financial market and then traded
among investors in the secondary financial market.
7. What type of financial institution is an insurance company?
A. Depository
B. Investment
C. Contractual
D. Circulatory
- answer- C. Contractual
Correct! Insurance companies are contractual savings institutions.
8. Which financial institution invests funds contributed by a company to provide retirement
funds for the company's employees?
A. Mutual fund
B. Insurance
C. Pension fund
D. Central bank
- answer- C. Pension fund
Correct! This is the role of pension funds.
9. Personal income is which type of economic indicator?
A. Coincident
B. Lagging
C. Unifying
D. Leading
- answer- A. Coincident
Correct! Coincident indicators change as the economy changes.
, 10. Which term refers to something that conforms with accepted standards of conduct that
guide a person's behavior?
A. Moral
B. Standard
C. Legal
D. Ethical
- answer- D. Ethical
Correct! Ethical refers to the accepted standards of conduct that guide a person's behavior
11. What is the second step in finding a solution to an ethical dilemma?
A. Consider the consequences that may come from the action.
B. Identify and define the problem.
C. Consider alternative courses of action.
D. Calculate the value added to the company.
- answer- C. Consider alternative courses of action
Correct! First, identify and define the problem. Then, consider alternative courses of action.
12. How can agency problems be reduced through corporate control?
A. Setting strict goals
B. Accounting manipulations
C. Executive compensation
D. Acquisition of a foreign subsidiary
- answer- C. Executive compensation
Correct! By compensating the management team with stocks and stock options,
management may be willing to take on riskier projects. This creates more value for the
owners because riskier projects will increase the value of financial securities.
13. What are the main services offered by financial institutions?
