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Free CFM — Certificate in Financial Markets Exam Questions and Answers
Last updated: March 30, 2025
Examtopics CFM — Certificate in Financial Markets Prepaway Real Exam Questions and dumps free download
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CFM — Certificate in Financial Markets
#Question
If a stock's PEG ratio is less than 1, what does this suggest?
A.
Undervaluation
B.
High growth potential
C.
Fair valuation
D.
Overvaluation
Correct Answer:
A
A PEG ratio below 1 often indicates that the stock may be undervalued based on its expected earnings growth rates.
#Question
If a sector experiences rapid technological advancement, what advantage might a company in that sector gain?
A.
Market inefficiency
B.
Reduced labor costs
C.
Competitive advantage
D.
Decrease in sales
Correct Answer:
C
Companies in rapidly advancing sectors often gain a competitive advantage as they can innovate and offer new products or services to consumers.
#Question
If a corporation decides to retain more earnings rather than paying dividends, what is a likely consequence?
A.
Increased shareholder value
B.
Decreased stock value
C.
Increased cash reserves
D.
Lower future growth
Correct Answer:
C
Retaining more earnings generally leads to increased cash reserves, allowing for reinvestment into the business and potential for future growth opportunities.
#Question
When a financial analyst refers to "market capitalization," what does this mean?
A.
Total liabilities
B.
Company assets
C.
Outstanding shares value
D.
Company profits
Correct Answer:
C
Market capitalization refers to the total market value of a company's outstanding shares, indicating its relative size and value in the market.
#Question
If an investor observes a pattern of price decline in a stock, what action might they take?
A.
Hold onto shares
B.
Sell the shares
C.
Buy more shares
D.
Invest in derivatives
Correct Answer:
B
Observing a price decline may lead an investor to sell shares to minimize potential losses or re-evaluate their investment strategy.
#Question
A firm focusing on shareholder value maximization is likely prioritizing what?
A.
Long-term growth
B.
Financial obligations
C.
Short-term whims
D.
Employee satisfaction
Correct Answer:
A
Prioritizing shareholder value maximization typically means a focus on strategies that enhance long-term growth and profitability.
#Question
If a firm's working capital ratio is low, what does this indicate?
A.
Strong liquidity
B.
Inefficiencies
C.
Financial difficulties
D.
High cash reserves
Correct Answer:
C
A low working capital ratio often signifies financial difficulties, indicating potential struggles to meet short-term obligations.
CFM — Certificate in Financial Markets
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