ACCA Financial Management FM Exam Practice Questions 2023 - Part 2
1. Which of the following statements is correct regarding profit maximization as the primary goal of the firm?
A) Profit maximization considers the firm's risk level.
B) Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.
C) Profit maximization does consider the impact on individual shareholder's EPS.
D) Profit maximization is concerned more with maximizing net income than the stock price.
2. The __________ decision involves a determination of the total amount of assets needed, the composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.
A) Asset management
B) Financing.
C) Investment.
D) Accounting.
3. All constituencies with a stake in the fortunes of the company are known as __________.
A) Shareholders.
B) Stakeholders.
C) Creditors.
D) Customers.
4. Interest paid (earned) on both the original principal borrowed (lent) and previous interest earned is often referred to as __________.
A) Present value.
B) Simple interest
C) Future value.
D) Compound interest.
5. The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as __________.
A) A probability distribution.
B) The expected return.
C) The standard deviation.
D) Coefficient of variation.
A) Profit maximization considers the firm's risk level.
B) Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.
C) Profit maximization does consider the impact on individual shareholder's EPS.
D) Profit maximization is concerned more with maximizing net income than the stock price.
2. The __________ decision involves a determination of the total amount of assets needed, the composition of the assets, and whether any assets need to be reduced, eliminated, or replaced.
A) Asset management
B) Financing.
C) Investment.
D) Accounting.
3. All constituencies with a stake in the fortunes of the company are known as __________.
A) Shareholders.
B) Stakeholders.
C) Creditors.
D) Customers.
4. Interest paid (earned) on both the original principal borrowed (lent) and previous interest earned is often referred to as __________.
A) Present value.
B) Simple interest
C) Future value.
D) Compound interest.
5. The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as __________.
A) A probability distribution.
B) The expected return.
C) The standard deviation.
D) Coefficient of variation.
1. Right Answer: D
Explanation:
2. Right Answer: C
Explanation:
3. Right Answer: B
Explanation:
4. Right Answer: D
Explanation:
5. Right Answer: B
Explanation:
Explanation:
2. Right Answer: C
Explanation:
3. Right Answer: B
Explanation:
4. Right Answer: D
Explanation:
5. Right Answer: B
Explanation:
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