FAMI FCLP Module 1: Business Management and Structures

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Questions and Answers

What is the term for a group of corporations with diversified business activities in varied industries?

Holding company

Subsidiaries

Conglomerate (correct)

Related party

What is the amount paid by stockholders in excess of the par value called?

Capital surplus (correct)

Par value

Capital stock

Retained earnings

If Ana deposited P10,000.00 in a bank in a time deposit account at 4% interest in 90 days, approximately how much will she earn?

267

100.00

107.50 (correct)

400

Who is responsible for internal supervision of other employees in a Broker Dealer?

Officer Signup and view all the answers

Who elects the Board of Directors (BOD) of a corporation?

Common Stockholder Signup and view all the answers

What is the term for a corporation that underwrites securities of another person?

Investment House Signup and view all the answers

Which of the following is NOT a qualified investor participant?

Individual Investor Signup and view all the answers

What is the minimum total assets required for an entity to be a qualified investor participant?

P1B Signup and view all the answers

What is not a requirement for a broker or dealer?

Automatically terminating the registration of a salesman upon cessation of affiliation Signup and view all the answers

What is the role of an Associated Person?

Employment in a Broker Dealer Signup and view all the answers

What is the purpose of the Board of Directors in a corporation?

To oversee the management of the corporation Signup and view all the answers

What is the term for a company that owns and controls another company?

Holding company Signup and view all the answers

Who needs to register with the Commission?

All of the above Signup and view all the answers

What is the consequence of not registering with the Commission?

Prohibition from engaging in the business of buying or selling securities Signup and view all the answers

What is the term for a minimum capital requirement for brokers or dealers?

RBCA Signup and view all the answers

What is the role of a Broker Dealer?

Buying or selling securities Signup and view all the answers

What type of voting allows a stockholder to spread their total votes among the number of positions to be filled in any manner?

Cumulative voting Signup and view all the answers

What type of market is it if the proceeds from the sale of securities go directly to the issuing corporation?

Primary market Signup and view all the answers

What is true concerning treasury stock?

It cannot be reissued to the public Signup and view all the answers

What is a written authorization allowing another person to vote in the place of a shareholder?

Proxy Signup and view all the answers

According to the Corporation Code of the Philippines, what percentage of a corporation's authorized capital must be paid up?

25% Signup and view all the answers

What is the maximum number of shares a corporation may issue multiplied by the par value of each share?

Authorized capital Signup and view all the answers

What is the total number of shares of common stock that a corporation has issued?

Issued capital Signup and view all the answers

What is the difference between issued shares and treasury shares?

Treasury shares are held by the corporation Signup and view all the answers

What is the face value of the bond?

1,000,000 Signup and view all the answers

How many shares of CDE Incorporated are outstanding?

15,000,000 Signup and view all the answers

What happens to the share price in a stock split?

It decreases Signup and view all the answers

What are bonds rated 'CC' or below called?

Junk Bonds Signup and view all the answers

What should be the market price of a convertible preferred stock to be at parity with the common stock?

PHP 18.00 Signup and view all the answers

What is the relationship between the principal and face value of a bond?

The face value is equal to the principal Signup and view all the answers

What is included in the computation of a country's GNP?

Dollar remittances of OFWs Signup and view all the answers

What is the difference between GDP and GNP?

GNP includes income earned abroad, while GDP does not Signup and view all the answers

What is measured by the Consumer Price Index (CPI)?

The general level of prices Signup and view all the answers

What is the term for the purchasing power of money?

Purchasing Power of Money Signup and view all the answers

What determines the prices of stock in the secondary market?

Investors who affect supply and demand Signup and view all the answers

Which of the following is not considered a liquid or semi-liquid asset?

Commercial Papers Signup and view all the answers

What is the main difference between GDP and GNP?

GNP includes income earned abroad, while GDP does not Signup and view all the answers

What is the term for the total value of goods and services produced by a country in a given year?

GDP Signup and view all the answers

Study Notes

Corporate Structure

A group of corporations with diversified business activities in varied industries, controlled and managed by a parent corporate entity, is called a conglomerate.
A subsidiary is a corporation controlled by another corporation, known as the parent corporation.

Stock and Bondholder Rights

The amount paid by stockholders in excess of the par value is called capital surplus.
Common stockholders elect the Board of Directors (BOD) of a corporation.
Preferred stockholders have priority over common stockholders in terms of dividends and asset distribution.

Financial Markets

A primary market is where the proceeds from the sale of securities go directly to the issuing corporation.
A secondary market is where existing securities are traded among investors.
Over-the-counter (OTC) market is a type of secondary market where securities are traded directly between two parties.

Treasury Stock

Treasury stock is an issued stock that has been repurchased by the corporation.
It does not receive dividends and has no voting rights.
It is not considered an outstanding stock.

Voting and Proxies

Cumulative voting is a type of voting where stockholders can spread their total votes among the number of positions to be filled.
A proxy is a written authorization allowing another person to vote in the place of a shareholder.

Corporation Code

At least 25% of a corporation's paid-up capital must be paid up.
Authorized capital is the maximum number of shares a corporation may issue, multiplied by the par value of each share.

Bond Ratings

Bonds rated "CC" or below are called junk bonds.
Junk bonds are considered high-risk investments.

National Income

Gross National Product (GNP) measures the value of all goods and services produced by a country's citizens, regardless of where they are produced.
Gross Domestic Product (GDP) measures the value of all goods and services produced within a country.
Dollar remittances of Overseas Filipino Workers (OFWs) are considered in the computation of the country's GNP.

Economic Indicators

The Consumer Price Index (CPI) is an indicator of the general level of prices and is also a measure of the purchasing power of money.
The CPI measures the average change in prices of a basket of goods and services.

Securities and Markets

T-notes, T-bills, and short-term certificates of indebtedness issued by the Bangko Sentral ng Pilipinas (BSP) are considered liquid or semi-liquid assets.
Commercial papers are not considered liquid or semi-liquid assets.
Prices of stock in the secondary market are determined by investors who affect supply and demand.

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Description

Test your knowledge of business management and organizational structures with this 179-question mock exam from FAMI FCLP Module 1. Covering topics such as corporate entities, business activities, and more.