JCSGO CHRISTIAN ACADEMY

SENIOR HIGH SCHOOL DEPARTMENT

S.Y. 2017-2018
Fourth Quarter Examination
Senior High
BUSINESS FINANCE
School

NAME: _______________________________________ SCORE:__________

STRAND:_____________________ DATE:___________
I. Multiple Choice Read and analyze each statements carefully. Write the letter of the BEST answer on the
space. (10pts)

___________1. Which of the following are examples of debt securities?

a. Commercial papers and bonds.
b. Legal papers and bonds
c. Credit cards and loans
d. Amortization and loans

___________2. Why Debt Financing creates a contractual obligation?

a. for the borrower to pay the interest and principal
b. for the borrower not to pay the interest
c. for the borrower to pay the principal only
d. for the borrower not to pay the principal and interest .

___________3. Which of the following is one of the benefits of debt financing?

a. Creditors generally do not intervene in the decisions of the management.
b. Creditors generally intervene in the decisions of the management.
c. Interest expense is taxable.
d. Creditors intervene in certain decisions of the management.

___________4. Which of the following is not a Duty of a Borrower to the Creditor?

a. Pay the creditors based on the payment schedule agreed upon.
b. Pay the creditor’s business permit and tax.
c. Provide the collateral as agreed upon the loan negotiation.
d. Comply with the provision of the loan covenant.

___________5. What does the quotation “A peso today is worth more than a peso tomorrow”
illustrates?
a. True Value of Money
b. Time Value of Money
c. Present Value of Money
d. Future Value of Money

___________6. What does the Effective Annual Interest Rate considers?

a. The effect of the present value of the principal
b. The effect of the frequency of compounding
c. The effect of the rate of the compounding
d. The effect of the Cash flow of the debtor

___________7. Which of the following is the basis of Interest earn or incurred in computing the
Compounding Interest?
a. The Original Principal and Interest Rate
b. The Original Principal and Time or the term of loan
c. The Original Principal and interest earned from the previous periods.
d. The Original Principal and interest earned from the other loan

___________8. Which of the following best describe the Present Value of Money?
a. The discounted value of the original Principal
b. The discounted value of the interest Rate
c. The discounted value of a future cash flow today
d. The discounted value of a future Interest earned.
___________9. What are the components of the required rate of return?
a. Required Rate of Return = Rate of Cash Flow + Expected of Inflation + Risk Premium
b. Required Rate of Return = Interest Rate + Expected of Inflation + Risk Premium
c. Required Rate of Return = Real Risk-free Rate + Expected of Inflation + Risk
Premium
d. Required Rate of Return = Future Value of Money + Expected of Inflation + Risk
Premium

___________10. How does Risk Aversion works?

a. Maximize returns for the highest level of risk
b. Maximize returns for a given level of interest.
c. Maximize returns for the lowest level of risk
d. Maximize returns for a given level of risk.

II. Word Problem. (20pts.)

Using the situations provided, compute the annual interest, total interest, and amount to be received or
paid at the end of the term for each scenario using SIMPLE INTEREST ASSUMPTION.

11 – 15. Your mother invested P 18,000 in government securities that yield 6% annually for two years.

Cumulative
Year Principal Rate Time Interest Total
Interest
1
2

15 – 20. Your father obtain a car loan for P 800,000 with an annual rate of 15% for 5 years

Cumulative
Year Principal Rate Time Interest Total
Interest
1
2
3
4
5

Using the situations provided, compute the annual interest, total interest, and amount to be received or
paid at the end of the term for each scenario using COMPOUND INTEREST ASSUMPTION.

21 – 25. Your mother invested P 18,000 in government securities that yield 6% annually for two years.

Principal +
Cumulative
Year Cumulative Rate Time Interest Total
Interest
Interest
1
2

26 – 30. Your father obtain a car loan for P 800,000 with an annual rate of 15% for 5 years

Principal +
Cumulative
Year Cumulative Rate Time Interest Total
Interest
Interest
1
2
3
4
5
II. Classification. Classify the banks below if it is a UNIVERSAL BANK, COMMERCIAL
BANK, or THRIFT BANK. (10pts)

____________ 31. Banco de Oro ____________ 37. Robinsons Bank

____________ 32. Union Bank
____________ 33. Bank of the Philippine Islands
____________ 34. East West Bank
____________ 35. Bank of Commerce
____________ 36. Philippine Bank of
Communication
____________ 38. BPI Family Savings Bank
____________ 39. Philippine Savings Bank (Metro
Bank Group)
____________ 40. China Bank Savings

III. Enumeration. (20pts)

Benefits of Debt Financing

41.
42.
43.
Sources of General Funds
Sources of Long-term Funds
44.
53.
45.
54.
46.
55.
Sources of Short-term Funds
56.
47.
57.
48.
49.
Duties of the borrower to Creditors
50.
58.
51.
59.
52.
60

IV. Illustration (51 to 70): draw a diagram that will illustrate the relationship of the Agencies below
and write a short description of their roles.
 Banko Sentral ng Pilipinas  Private Banks  Philippine Deposit
 Anti-Money Laundering  Security Exchange Insurance Corporation
Council Commission  Insurance Commission
V. Essay. Compose an essay of not less than 7 sentences explaining the quotation “Compound interest
is the eighth wonder of the world. He who understands it, earns it… He who doesn’t … pays it.” (71-80)

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Rubric:
Content – 3
Clarity –2
Facts – 5

“There are no secrets to success. It is the result of preparation, hard work, and learning from failure.”
-Colin Powell-