CPFM General Practice Test 2

Question 1

Under the time value of money, which value answers 'how much is a future cash flow worth today'?

Accepted Answer

Present value

Answer

Future value

Answer

Terminal value

Answer

Book value

Question 2

A bond's coupon rate is 5% and the market yield is 7%. The bond will most likely trade at a:

Accepted Answer

Discount

Answer

Premium

Answer

Par

Answer

Negative price

Question 3

Which ratio measures a company's ability to pay short-term obligations with its most liquid assets, excluding inventory?

Accepted Answer

Quick ratio

Answer

Current ratio

Answer

Debt-to-equity

Answer

Gross margin

Question 4

What does a positive net present value (NPV) on a project indicate?

Accepted Answer

The project adds value and should be accepted

Answer

The project should be rejected

Answer

The project breaks even exactly

Answer

The discount rate is negative

Question 5

Diversification primarily reduces which type of risk in a portfolio?

Accepted Answer

Unsystematic risk

Answer

Systematic risk

Answer

Inflation risk

Answer

Interest rate risk

Question 6

In the DuPont analysis, return on equity (ROE) is decomposed into net profit margin, asset turnover, and:

Accepted Answer

Equity multiplier

Answer

Current ratio

Answer

Dividend yield

Answer

Beta

Question 7

Which financial statement reports a company's cash inflows and outflows over a period?

Accepted Answer

Statement of cash flows

Answer

Balance sheet

Answer

Income statement

Answer

Statement of retained earnings