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
Net present value (NPV) analysis accepts a project when the NPV is:
Answer: Greater than zero
A positive NPV indicates the project adds value beyond its cost of capital, so it should be accepted.
Which asset class is generally considered to carry the highest long-term risk and return?
Answer: Equities (stocks)
Equities historically offer higher returns but with greater volatility than fixed-income or cash.
What is the primary purpose of a company's statement of cash flows?
Answer: Show changes in cash from operating, investing, and financing activities
The cash flow statement tracks cash movements across operating, investing, and financing activities.
In anti-money laundering (AML) practice, 'KYC' stands for:
Answer: Know Your Customer
KYC (Know Your Customer) requires verifying client identity to prevent illicit financial activity.
The Capital Asset Pricing Model (CAPM) uses beta to measure:
Answer: Systematic risk relative to the market
Beta in CAPM measures an asset's sensitivity to overall market movements (systematic risk).
Which of the following is a characteristic of a progressive tax system?
Answer: Higher earners pay a higher marginal rate
In a progressive system, the marginal tax rate increases as taxable income rises.
Compound interest differs from simple interest because it:
Answer: Earns interest on previously accumulated interest
Compound interest calculates returns on both the principal and accumulated interest.