These are ACCA F9 (FM) Financial Management MCQs for Part-B of the Syllabus “Financial management environment”.

These multiple-choice questions (MCQs) are designed to help ACCA F9 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

Students should not attempt these MCQs until they have finished the entire chapter.
All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F9 (FM) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:	ACCB – Association of Chartered Certified Accountants
Fundamental Level:	Applied Skills
Subject:	Financial Management
Paper:	F9 – FR
Chapter and Topic	The economic environment for business , The nature and role of financial markets and institutions, The nature and role of money markets
Syllabus Area:	B – “Financial management environment”
Questions Type:	CBE MCQs
Exam Section:	Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part B of the Syllabus; “Financial management environment” of ACCA F9 (FM) Financial Management Module.

Time

These MCQs are not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate

Result

Students will get their F9 CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

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F9 (FM) - Part B - MCQs - Financial management environment

Course: ACCA - Association of Chartered Certified Accountants
Subject: F9 (FM) - Financial Management
Syllabus Area: B - Financial management environment
Chapter: 02 The economic environment for business, 03 Financial markets, money markets and institutions
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 21

If a government has a macroeconomic policy objective of expanding the overall level of economic activity, which TWO of the following measures would be consistent with such an objective?

Increasing interest rates

Increasing public expenditure

Increasing the exchange rate

Decreasing taxation

2 / 21

Which TWO of the following are among the main goals of macroeconomic policy?

Achievement of a balance between exports and imports

Encouraging an equitable distribution of income

Encouraging waste recycling

Low and stable inflation

3 / 21

Which of the following represent forms of market failure where regulation may be a solution?

Imperfect competition
Social costs or externalities
Imperfect information

1, 2 and 3

2 and 3 only

1 and 2 only

1 only

4 / 21

If the US dollar weakens against the pound sterling, will UK importers suffer or benefit?

Benefit

Suffer

5 / 21

If the US dollar weakens against the pound sterling, will UK exporters suffer or benefit?

Suffer

Benefit

6 / 21

The following statements relate to fiscal policy and demand management.

Which of the statement(s) is/are TRUE?

If a government spends more by borrowing more, it will raise demand in the economy.

If demand in the economy is high then government borrowing will fall.

7 / 21

Which TWO of the following statement TRUE?

Capital market securities are assets for the seller but liabilities for the buyer

Financial markets can be classified into exchange and over-the-counter markets

A secondary market is where securities are bought and sold by investors

8 / 21

Governments have a number of economic targets as part of their fiscal policy.

Which of the following government actions relate predominantly to fiscal policy?

Decreasing interest rates in order to stimulate consumer spending.
Reducing taxation while maintaining public spending.
Using official foreign currency reserves to buy the domestic currency.
Borrowing money from the capital markets and spending it on public works.

2, 3 and 4

1 and 3

2 and 4 only

1 only

9 / 21

Which of the following statements are correct?

A certificate of deposit is an example of a money market instrument.
Money market deposits are short-term loans between organisations such as banks.
Treasury bills are bought and sold on a discount basis.

2 and 3 only

1, 2 and 3

1 and 3 only

1 and 2 only

10 / 21

Which of the following statements relating to money markets is/are true?

Lending is for periods greater than one
Lending is
Borrowers are mainly small

1 and 3

2 only

1 and 2

2 and 3

11 / 21

Which of the following statement is TRUE?

The reverse yield gap refers to equity yields being higher than debt yields.

Securitisation is the conversion of illiquid assets into marketable securities.

Disintermediation arises where borrowers deal directly with lending individuals.

12 / 21

Rank the following from highest risk to lowest risk from the investor's perspective.

Preference share
Treasury bill
Corporate bond
Ordinary share

1, 4, 2, 3

1, 4, 3, 2

4, 2, 1, 3

4, 1, 3, 2

13 / 21

AB plc, a company listed in the UK and Australia, decides to issue unsecured US dollar bonds in Australia.

Which of the following is the correct definition for these bonds?

Commercial paper

Eurobonds

Intercontinental bills

Junk bonds

14 / 21

What role would the money market have in a letter of credit arrangement?

Discounting the banker's acceptance

Acceptance of the letter of credit

Issuing of a banker's acceptance

Initial arrangement of the letter of credit

15 / 21

A listed company is to enter into a sale and repurchase agreement on the money market.

The company has agreed to sell $10 million of treasury bills for $9.6 million and will buy them back in 50 days' time for $9.65 million.

Assume a 365-day year.

What is the implicit annual interest rate in this transaction? (to the nearest 0.01%)

_______ %

16 / 21

which THREE of the following statements correctly describe the functions that financial intermediaries fulfil for customers and borrowers?

Fund aggregation

Maturity transformation

Dividend creation

Pooling of losses

17 / 21

Which of the following organisations is most likely to benefit from a period of high price inflation?

A supplier of goods in a market where consumers are highly price sensitive and substitute imported goods are available

An organisation which has a large number of long-term payables

A large retailer with a high level of inventory on display and low rate of inventory turnover

An exporter of goods to a country with relatively low inflation

18 / 21

Which TWO of the following statements are FALSE?

When governments adopt a floating exchange rate system, the exchange rate is an equilibrium between demand and supply in the foreign exchange market.

Fiscal policy seeks to influence the economy and economic growth by increasing or decreasing interest rates.

Monetary policy seeks to influence aggregate demand by increasing or decreasing the money raised through taxation.

19 / 21

As the economy booms and approaches the limits of productivity at a point in time, which of the following statement is TRUE description of the impact of this?

High export demand, increasing growth rates, high inflation and high interest rates.

Increased inflation (higher sales prices and higher costs), difficulty in finding suitable candidates to fill roles and higher interest rates.

Higher government spending, lower tax rates, high inflation and low unemployment.

Reducing inflation, falling demand, reducing investment, increasing unemployment.

20 / 21

A government follows an expansionary monetary policy.

How would this typically affect businesses?

A contraction in demand from customers, higher interest rates and less available credit

Lower taxes, higher demand from customers but less government subsidies/available contracts

Higher demand from customers, lower interest rates on loans and increased availability of credit

Lower interest rates, lower exchange rates and higher tax rates

21 / 21