D775 Introduction to Business Finance Pre-
Assessment Exam Review Questions with
Correct Verified Answers Graded A+ 2026
Which principle guides business finance to optimize resource use? ANSWER> Risk-
return trade-off
What activity describes capital raising in business finance? ANSWER> Securing funding
for business operations and projects
1
, Which finance activity involves the creation, circulation, and management of money?
ANSWER> Setting monetary policy
What is a characteristic of preferred stock? ANSWER> Fixed dividends
What is the purpose of bonds from the perspective of issuers? ANSWER> To raise capital
without diluting ownership
Which type of bonds are considered junk bonds? ANSWER> Speculative bonds
Which type of investment vehicle is uniquely used for retirement savings? ANSWER>
401(k)
What is true about options in financial derivatives? ANSWER> They give the buyer the
right, but not the obligation to buy or sell an asset
How do funds benefit from economies of scale? ANSWER> By making large-scale
investments that reduce transaction costs
What is an initial public offering (IPO)? ANSWER> The first sale of a company's stock to
the public
What is the trading of stocks on the NYSE? ANSWER> The secondary market where
existing securities are bought and sold among investors.
What are the two main types of financial markets based on their functions? ANSWER>
Primary markets and secondary markets.
What is a role of financial regulators? ANSWER> Ensuring fair and transparent markets.
What are depository institutions? ANSWER> Institutions that accept deposits and provide
loans.
2
Assessment Exam Review Questions with
Correct Verified Answers Graded A+ 2026
Which principle guides business finance to optimize resource use? ANSWER> Risk-
return trade-off
What activity describes capital raising in business finance? ANSWER> Securing funding
for business operations and projects
1
, Which finance activity involves the creation, circulation, and management of money?
ANSWER> Setting monetary policy
What is a characteristic of preferred stock? ANSWER> Fixed dividends
What is the purpose of bonds from the perspective of issuers? ANSWER> To raise capital
without diluting ownership
Which type of bonds are considered junk bonds? ANSWER> Speculative bonds
Which type of investment vehicle is uniquely used for retirement savings? ANSWER>
401(k)
What is true about options in financial derivatives? ANSWER> They give the buyer the
right, but not the obligation to buy or sell an asset
How do funds benefit from economies of scale? ANSWER> By making large-scale
investments that reduce transaction costs
What is an initial public offering (IPO)? ANSWER> The first sale of a company's stock to
the public
What is the trading of stocks on the NYSE? ANSWER> The secondary market where
existing securities are bought and sold among investors.
What are the two main types of financial markets based on their functions? ANSWER>
Primary markets and secondary markets.
What is a role of financial regulators? ANSWER> Ensuring fair and transparent markets.
What are depository institutions? ANSWER> Institutions that accept deposits and provide
loans.
2
