Category: Business Studies

Financial instruments with maturities of less than one year are traded in which of the market options listed below?

Select ONE answer:

1. Equity market
2. Capital market
3. Money market
4. Fixed-income market

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Financial instruments with maturities of less than one year are traded in the money market.
4. Not correct

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Some sources of finance are available to both companies and households.

Which of the following options is a source of finance available to companies only?

Select ONE answer:

1. Bank overdraft
2. Credit cards
3. Commercial paper
4. Hire purchase

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Commercial paper – Commercial paper is a source of finance for banks and companies with good credit ratings.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex has a short to medium-term financial objective he wishes to achieve and has money to invest in respect of achieving this objective.

Which of the following statements about priority and related risk and return is true in this situation?

Select ONE answer:

1. If it is a high priority the individual will want high risk and high return
2. If it is a low priority the individual will want low risk and would accept low return
3. If it is a high priority the individual will want low risk and would accept low return
4. If it is a low priority the individual will not bother to invest

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > An individual with a high priority short to medium-term financial objective and money to invest in respect of this will want to minimise risk and will accept a lower return as a result.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Ken and Jill are couple in their early 60s with grown-up children Lucy and Alex.

The key financial objective for Ken and Jill will be to maximise income because?

Select ONE answer:

1. Their expenditure is so high
2. They can save and invest for retirement
3. They can launch their work careers
4. They can buy their first house

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > At this stage in their lives people generally aim to build up their retirement ‘nest-eggs’. As their children are grow-up, their expenditure is not so high, plus they have generally already bought property and established careers.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Alex plc is waiting to start its new factory building programme.

It is likely to start within the next 120 days, but the precise start date and timing of the cash flows are still uncertain.

Alex plc has £250,000 available in cash in anticipation of the investment in the factory being made when the building programme begins.

Which of the following is the least appropriate use of the funds in the interim period?

Select ONE answer:

1. Investment in equities
2. Treasury or central government bills
3. Bank deposits
4. Local authority deposits

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Short-term cash surpluses will NOT normally be invested in equities owing to the risks associated with achieving a positive return over a short period.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.