Financial Management MCQs

What is the difference between a fixed rate and a variable rate loan.

A) Fixed rate loans have a variable interest rate, while variable rate loans have a fixed interest rate
B) Fixed rate loans have a fixed interest rate, while variable rate loans have a variable interest rate
C) Fixed rate loans have a lower interest rate than variable rate loans
D) Fixed rate loans have a higher interest rate than variable rate loans
Answer: B) Fixed rate loans have a fixed interest rate, while variable rate loans have a variable interest rate

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What is the difference between a debit card and a credit card.

A) Debit cards allow you to borrow money, while credit cards allow you to use your own money
B) Debit cards allow you to use your own money, while credit cards allow you to borrow money
C) Debit cards have a higher interest rate than credit cards, while credit cards have a lower interest rate
D) Debit cards have a lower interest rate than credit cards, while credit cards have a higher interest rate
Answer: B) Debit cards allow you to use your own money, while credit cards allow you to borrow money

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What is the difference between a budget deficit and a budget surplus.

A) A budget deficit occurs when a government spends more than it collects in revenue, while a budget surplus occurs when a government collects more revenue than it spends
B) A budget deficit occurs when a government collects more revenue than it spends, while a budget surplus occurs when a government spends more than it collects in revenue
C) A budget deficit occurs when a government spends exactly the same amount as it collects in revenue, while a budget surplus occurs when a government collects exactly the same amount as it spends
D) A budget deficit occurs when a government borrows money from other countries, while a budget surplus occurs when a government lends money to other countries
Answer: A) A budget deficit occurs when a government spends more than it collects in revenue, while a budget surplus occurs when a government collects more revenue than it spends

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What is the difference between simple interest and compound interest.

A) Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and the interest earned
B) Simple interest is calculated on both the principal and the interest earned, while compound interest is calculated only on the principal amount
C) Simple interest has a variable interest rate, while compound interest has a fixed interest rate
D) Simple interest has a fixed interest rate, while compound interest has a variable interest rate
Answer: A) Simple interest is calculated only

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What is the difference between a bond and a stock.

A) Bonds represent ownership in a company, while stocks represent a loan to a company
B) Bonds represent a loan to a company, while stocks represent ownership in a company
C) Bonds have a fixed interest rate, while stocks have a variable interest rate
D) Bonds have a variable interest rate, while stocks have a fixed interest rate
Answer: B) Bonds represent a loan to a company, while stocks represent ownership in a company

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What is the formula for calculating the return on investment (ROI).

A) ROI = (Gain from Investment – Cost of Investment) / Cost of Investment
B) ROI = (Gain from Investment + Cost of Investment) / Cost of Investment
C) ROI = Gain from Investment / Cost of Investment
D) ROI = Cost of Investment / Gain from Investment
Answer: A) ROI = (Gain from Investment – Cost of Investment) / Cost of Investment

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What is the difference between cash flow and profit.

A) Cash flow is the money that flows in and out of a business, while profit is the revenue minus the expenses
B) Cash flow is the revenue minus the expenses, while profit is the money that flows in and out of a business
C) Cash flow is the money that a company owes, while profit is the money that a company owns
D) Cash flow is the money that a company owns, while profit is the money that a company owes
Answer: A) Cash flow is the money that flows in and out of a business, while profit is the revenue minus the expenses

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What is the difference between financial risk and business risk.

A) Financial risk is the risk of loss due to changes in the market, while business risk is the risk of loss due to a company’s operations
B) Financial risk is the risk of loss due to a company’s operations, while business risk is the risk of loss due to changes in the market
C) Financial risk is the risk of loss due to regulatory changes, while business risk is the risk of loss due to competition
D) Financial risk is the risk of loss due to competition, while business risk is the risk of loss due to regulatory changes
Answer: A) Financial risk is the risk of loss due to changes in the market, while business risk is the risk of loss due to a company’s operations

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