ACCA AFM Practice Questions - ACCA Advanced Financial Management (AFM) Exam - ACCA AFM Practice Questions - ACCA Advanced Financial Management (AFM) Exam

Question 1

Under ACCA AFM, what is the primary financial objective that a senior financial executive of a listed company should pursue when advising the board?

Maximisation of shareholder wealth, typically measured by share price and dividends Maximisation of accounting profit reported in the income statement Minimisation of the company's effective tax rate each year Maximisation of total revenue and market share

Correct Answer:

Maximisation of shareholder wealth, typically measured by share price and dividends

Question 2

A multinational is considering its dividend policy. According to the residual theory of dividends, how much should the company pay out as a dividend?

Whatever cash remains after funding all positive-NPV projects from retained earnings A fixed percentage of accounting profit every year regardless of investment needs The maximum amount possible to signal confidence to the market An amount equal to the prior year's dividend plus inflation

Correct Answer:

Whatever cash remains after funding all positive-NPV projects from retained earnings

Question 3

In AFM, an agency conflict between shareholders and directors is BEST mitigated by which of the following arrangements?

Granting directors share options that vest based on long-term performance Paying directors a fixed salary with no performance element Allowing directors to set their own remuneration without a committee Maximising short-term earnings to boost annual bonuses

Correct Answer:

Granting directors share options that vest based on long-term performance

Question 4

A company has profit after tax of $40m, tax-allowable depreciation of $12m, and needs $18m of investment to maintain operations and comply with regulation. There are no other adjustments. What is the company's dividend capacity (free cash flow to equity available for dividends)?

$$34m $$40m $$58m $$22m

Correct Answer:

$$34m

Question 5

Which statement BEST describes the role of ethics and environmental, social and governance (ESG) considerations in a senior financial executive's decisions under the AFM syllabus?

They should be integrated into financial decisions because they affect long-term value and stakeholder relationships They are irrelevant to financial decisions and should be ignored to maximise profit They only matter for the marketing department, not finance They should be addressed only if legally compelled, never voluntarily

Correct Answer:

They should be integrated into financial decisions because they affect long-term value and stakeholder relationships

Exam overview

About this Exam

Prepare with the ACCA AFM Practice Questions - ACCA Advanced Financial Management (AFM) Exam practice quiz. This question bank includes 100 questions covering rate, company, value, cash, and project. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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ACCA AFM Practice Questions - ACCA Advanced Financial Management (AFM) Exam

This practice set contains 100 questions from the matching question bank and focuses on rate, company, value, cash, and project. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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ACCA AFM Practice Questions - ACCA Advanced Financial Management (AFM) Exam

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