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General Practice Test Flashcards

7 cards from real CPFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 General Practice Test flashcards as text

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

    Answer: Present value

    Present value discounts a future cash flow back to today using a discount rate.

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

    Answer: Discount

    When market yield exceeds the coupon rate, the bond sells below par at a discount.

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

    Answer: Quick ratio

    The quick (acid-test) ratio excludes inventory from current assets.

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

    Answer: The project adds value and should be accepted

    A positive NPV means returns exceed the required rate, adding shareholder value.

  5. Diversification primarily reduces which type of risk in a portfolio?

    Answer: Unsystematic risk

    Diversification reduces firm-specific (unsystematic) risk but not market-wide risk.

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

    Answer: Equity multiplier

    The equity multiplier captures financial leverage in the DuPont breakdown.

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

    Answer: Statement of cash flows

    The statement of cash flows tracks operating, investing, and financing cash movements.