Final Examination

INSTRUCTION: Select the letter for the best answer:
1. It is a transfer of property from the owner to another person.

A. Deed C. Succession
B. Donation D. Trust
2. The following are benefits of estate planning, except:
A. Eliminates family members C. Spares heirs a big tax bite
B. Protects young children D. Protects beneficiaries
3. It is a severe financial hardship, sudden and urgent occasion for action.
A. Business Motive C. Financial Independence
B. Status in society D. Unforeseen Emergencies
4. The following are business investment decisions, except:
A. Price C. Business Partners
B. Risk D. Alternatives
5. It is the annual rate of growth that an investment is expected to generate.
A. Net Present Value C. Payback Period
B. Internal Rate of Return D. Interest Rate
6. A legal document that is signed and delivered, especially one regarding the ownership of
property or legal rights.
A. Deed C. Succession
B. Donation D. Trust
7. One of the following is a process of planning for retirement.
A. Plan for travel fund C. Calculate your expenses.
B. Decide to study for the future D. Estimate the costs of your retirement goal
8. It is a state where an individual or household has accumulated sufficient financial resources
to cover its living expenses.
A. Business Motive C. Financial Independence
B. Status in society D. Unforeseen Emergencies
9. The following are characteristics of investment, except:
A. Tax shelter C. Risk
B. Vulnerability D. Safety
10. It is a financial metric that seeks to capture the total value of an investment opportunity.
A. Net Present Value C. Payback Period
B. Internal Rate of Return D. Interest Rate
11. Savings refers to the money that a person has left over after they subtract out their
consumer spending from their disposable income over a given time period.
A. True B. False
12. Investment is sacrificing some money value in the present with the expectation of making
gains in the future.
A. True B. False
13. Cash flow refers to the movement of cash into or out of a business, project, or a financial
product.
A. True B. False
14. Safety implies the certainty of return of capital without loss of money or time.
A. True B. False
15. Each investor tries to maximize his welfare by choosing the minimum combination of risk and
expected return in accordance with his preference and capacity.
A. True B. False
16. Retirement planning means preparing today for your future life so that you continue to meet
all your goals and to maintain your way of living in the
A. True B. False
17. As part of the process of retirement planning, it is a good decision to set your retirement
date first.
A. True B. False
18. Estate planning involves determining how an individual’s assets will be preserved, managed,
and distributed after death.
A. True B. False
19. Succession is the transfer of property from the owner to another person.
A. True B. False
20. One of the benefits of estate planning is to minimize disagreements, arguments and claims
by heirs on property.
A. True B. False
SITUATION NO. 1 (15pts.)
FGC Inc. is one of the leading companies that serves as an advisor to wealthy individuals. They assist
them as to what particular investment they must make with their money. As one of their top-
performing financial advisors, you were assigned to a young, wealthy man whose name is Piolo
Contis. Mr. Contis just won the lottery worth PHP 480,000,000.00. He is afraid that this money will be
gone in an instant if he does not properly manage it, so he seeks out an expert as to where he should
invest the money. There are three options that were presented to Mr. Contis, and he wants to invest
half of his winnings in one particular investment.
The following are the given options for Mr. Contis:
Option 1: Bonds with an annual interest of 5%- and 5-years maturity, makes payments annually, and
lastly has an 8% yield-to-maturity.
Option 2: Purchase of 80,000 square metres of land in Nueva Ecija. It is expected that the price of
land per square metre will increase by PHP 500 a year, and Mr. Contis can sell the land after 2 years.
As per the local government, the 2% real property tax will not increase for the next 5 years.
Option 3: Purchase share from three different companies.
Company Name No. of Shares Price per share Total Amount
Jollibee Food Corporation 1,000,000 72.00 72,000,000.00
Ayala Land Inc. 80,000 600.00 48,000,000.00
SM Prime Holdings Inc. 240,000 500.00 120,000,000.00
Below is a 5-year forecast for the price increase (decrease) per share.
Company Name 2024 2025 2026 2027 2028
Jollibee Food Corporation 5% -4% -1% 0.50% 10%

Ayala Land Inc. 1% 2% -3% 0.10% 5%
SM Prime Holdings Inc. 2% 1% -3% 1% 9%
Which of the three options can you suggest to Mr. Contis to invest his money? Discuss and justify
your answer.
SITUATION NO. 2 (10 pts.)
James Lustre, 26 years old, has savings at JapanBank and is currently employed as a full-time
employee in a private company. One day, he realised that working as a private employee would not
make him experience financial freedom.He targets attaining this by the age of 30. Given the below
information, what advice can you give to James? Should he continue to work full-time or invest his
money in a business? Explain and support your answer.
Factors Working Full Time Venturing into a Business
Working Hours 8 10
Working Days 5 7
Income per month 50,000.00 60,000.00
Supplies 20,000.00
Rent Expense 8,000.00 12,000.00
Food 15,000.00 5,000.00
Clothing 5,000.00 3,000.00
Transportation 5,000.00 -
Internet 2,000.00 2,000.00
Savings 15,000.00 18,000.00

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INSTRUCTION: Select the letter for the best answer:

1. It is a transfer of property from the owner to another person.

SITUATION NO. 1 (15pts.)

The following are the given options for Mr. Contis:

Option 3: Purchase share from three different companies.

Company Name No. of Shares Price per share Total Amount

Jollibee Food Corporation 1,000,000 72.00 72,000,000.00

Ayala Land Inc. 80,000 600.00 48,000,000.00

SM Prime Holdings Inc. 240,000 500.00 120,000,000.00

Company Name 2024 2025 2026 2027 2028

Jollibee Food Corporation 5% -4% -1% 0.50% 10%

SM Prime Holdings Inc. 2% 1% -3% 1% 9%

SITUATION NO. 2 (10 pts.)

Factors Working Full Time Venturing into a Business

Income per month 50,000.00 60,000.00

Rent Expense 8,000.00 12,000.00

Food 15,000.00 5,000.00

Clothing 5,000.00 3,000.00

Internet 2,000.00 2,000.00

Savings 15,000.00 18,000.00

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