MCQ Flashcards
7 cards from real AAFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 MCQ flashcards as text
Which financial statement reports a company's revenues and expenses over a specific period?
Answer: Income statement
The income statement summarizes revenues and expenses over a period to show net profit or loss.
What does the term 'liquidity' primarily measure for a business?
Answer: Ability to meet short-term obligations
Liquidity measures how easily a firm can cover its short-term liabilities with available assets.
In portfolio management, diversification primarily aims to reduce which type of risk?
Answer: Unsystematic risk
Diversification reduces unsystematic (company-specific) risk by spreading investments across assets.
The time value of money concept holds that a dollar today is worth:
Answer: More than a dollar in the future
A dollar today can be invested to earn returns, making it worth more than the same dollar later.
Which ratio measures a company's total debt relative to its shareholders' equity?
Answer: Debt-to-equity ratio
The debt-to-equity ratio compares total liabilities to shareholders' equity to gauge leverage.
A bond's price generally moves in which direction when market interest rates rise?
Answer: Falls
Bond prices move inversely to interest rates, so rising rates push existing bond prices down.
Which of the following best describes 'fiduciary duty' for a financial advisor?
Answer: Acting in the client's best interest
A fiduciary duty legally obligates an advisor to prioritize the client's interests above their own.