Financial Concepts

Category: Objective Test
Type: Individual


60-minute test administered during the NLC.

Objective Test Competencies: Financial Instruments and Institutions; Time Value of Money; Cost of Capital and Capital Budgeting; Valuation and Rates of Return; Financial Analysis; Capital Investment Decisions; Financial Risks and Returns; International Finance

Skills: Social, political, legal, and technical aspects of financial development and management are essential elements for contemporary study in business finance. This event provides recognition for PBL members who understand financial models and techniques used in reaching effective financial decisions.


Objective Test

Objective Test Guidelines

  • No materials may be brought to the testing site.
  • Electronic devices must be turned off and out of sight.
  • Financial calculators may be used for accounting, finance, and analysis & decision making events; calculators will be provided for all other events.

The general event guidelines below are applicable to all national competitive events. Please review and follow these guidelines when competing at the national level. When competing at the state level, check the state guidelines since they may differ.


  • Dues: Competitors must have paid PBL national and state dues by 11:59 p.m. Eastern Time on April 15 of the current school year.
  • NLC Registration: Participants must be registered for the NLC and pay the national conference registration fee in order to participate in competitive events.
  • Deadlines: The state chair, or designee, must register each state competitor on the official online entry forms by 11:59 p.m. Eastern Time on the second Friday in May.
  • Each state may submit three (3) individuals in all events requiring only objective tests and two (2) individuals or teams for all events that require a pre-judged or performance component.
  • Each competitor can compete in two (2) events.
  • Each competitor must compete in all parts of an event for award eligibility.
  • A team shall consist of two or three members. Exceptions are Parliamentary Procedure which must be a team of four or five members, and LifeSmarts which must be a team of two members.

Repeat Competitors

Competitors are not permitted to compete in an event more than once at the national level unless one of the following circumstances applies:

  • Modified Events: A competitor may compete in the same event when the event is modified. Note, if the only modification is a name change, competitors may not compete in the renamed event.
  • Team Events: One (1) competitor of the team may have competed in the same event at one (1) previous NLC; however, they may not compete more than twice in the event at the national level.
  • Chapter Events: Competitors may compete in a chapter event more than once (Community Service Project).
  • Individual Entry: A competitor who competed as an individual entry in a team event at the national level may compete in the same event a second time as part of a team, but not a second time as an individual.
  • Parliamentary Procedure: Two (2) competitors of the team may have competed in this event at a previous NLC; however, they may not compete more than twice at the national level.
  • Pilot Event: Competition in a pilot event does not disqualify a competitor from competing in the same event if it becomes an official competitive event. The participant may compete in another event as well as a pilot event.

Breaking Ties

  • Objective Tests: Ties are broken by comparing the correct number of answers to the last 10 questions on the exam. If a tie remains, the competitor who completed the test in a shorter amount of time will place higher. If this does not break the tie, answers to the last 20 questions will be reviewed and determine the winner.
  • Objective and Production Tests: The production test scores will be used to break a tie.
  • Objective Tests and Performances: The objective test score will be used to break a tie based on the tie-breaking criteria of objective tests.
  • Reports/Projects and Performances: The report/project scores will be used to break a tie.
  • Performances: Judges must break ties and all judges’ decisions are final.

National Deadlines

  • State chair/adviser must register all competitors for NLC competitive events online by 11:59 p.m. Eastern Time on the second Friday in May.
  • All prejudged components (report PDFs, resume/letter of application PDFs, and project URLs) must be received by 11:59 p.m. Eastern Time on the second Friday in May.
  • All URLs and PDFs for prejudged projects and reports will be submitted by the state adviser via the competitive events registration form.
  • All production tests must be received at FBLA-PBL by 11:59 p.m. Eastern Time on the third Friday in May.
  • Desktop Publishing—the finished product must be uploaded in PDF format by 11:59 p.m. Eastern Time on the third Friday in May. Label all documents with the event title, competitor’s name, state, and school.
  • All production tests must be uploaded online.
  • State chair/adviser may make name changes only (no additional entries) by 11:59 p.m. Eastern Time on the first Friday in June. Competitor drops are the only changes allowed after this date and onsite.

National Awards

The number of competitors will determine the number of winners. The maximum number of winners for each competitive event is 10. Only one (1) award is given to the schools competing in chapter events (Community Service Project and Local Chapter Annual Business Report).

Additional Materials

  • Financial calculators may be brought to objective testing and used for any accounting, finance, or analysis & decision making events.
  • Certain events may allow the use of additional materials. Please refer to event guidelines.

Americans with Disabilities Act (ADA)

FBLA‑PBL meets the criteria specified in the Americans with Disabilities Act for all participants who submit a special needs form.

Recording of Presentations

No unauthorized audio or video recording devices will be allowed in any competitive event. Participants in the performance events should be aware the national association reserves the right to record any performance for use in study or training materials.

Graduate Students

Graduate students may compete in all PBL events.


General Competitive Events Tips
Event Tips
Sample Practice Materials

Format Guide

Website Resources
Financial Instruments and Institutions
1. Describe the standard and unique features of the following securities: bills, notes, bonds, zeros, and muni’s.
2. Demonstrate an understanding of negotiable instruments and identify the terms of negotiability.
3. Define the concept of the money supply.
4. Identify the functions of the Federal Reserve.
5. Justify the existence of money in the economy.
6. Identify the types of short-term bank loans.
7. Describe the process of accounts receivable financing.
8. Characterize the limitations of intermediate-term bank loans.
9. Explain and give examples of long-term debt financing.
10. Describe the process of investment banking.
11. Obtain business credit and control its use.
12. Explain forms of financial exchange (e.g., cash, credit, debit, electronic funds, and transfer).
13. Identify types of currency (e.g., paper money, coins, banknotes, government bonds, and treasury notes).
14. Describe functions of money (e.g., medium of exchange, unit of measure, and store of value).
15. Examine the structure and operation of the banking system in the United States.
16. Explain the role of central banks.
17. Explain financial services companies.
18. Discuss the role of credit unions.
19. Explain the role of savings and loan associations.
20. Discuss the role of the World Bank Group in international financial assistance.
Time Value of Money
1. 1. Explain the following concepts: present and future value of money, annuity, lump sum, effective interest rates, APR, annuity due, amortizing loans, and perpetuity
2. Utilize the time value of money concepts.
3. Assess the time value of money concepts in decision making.
4. Discuss the time value of money and implications thereof to risk, rates of return, and value.
5. Perform various types of time value of money calculations.
6. Apply the time value concept to financial decision situations.
7. Discuss the conflicts between the Net present value and the Internal Rate of Return and how to resolve these conflicts.
Cost of Capital and Capital Budgeting
1. Explain the significance of a firm’s capital structure.
2. Discuss the theory of capital structure.
3. Describe the financial needs of a business at different stages of its development.
4. Compare and contrast the various financing opportunities (both debt and equity) organizations have available for making decisions to fund operations and capital expenditures.
5. Discuss factors to consider in choosing between debt and equity capital.
6. Analyze and control cash flow.
7. Implement capital budgeting techniques in making capital expenditure decisions.
8. Engage in certain capital budgeting procedures including payback, discounted payback, net present value, and internal rate of return.
9. Discuss the general concepts of capital budgeting.
10. Describe the process of evaluating capital budgeting projects.
11. Tie the capital budgeting decision to the overall goal of shareholder wealth maximization.
12. Describe how the cost of capital plays a role in various decisions made by financial managers.
13. List the factors that determine the cost of capital
14. Compute the cost of debt, preferred and common stock capital and put them together to develop the overall cost of capital for the firm.
15. Define the role of tax laws in computing cost of capital.
16. Identify and calculate component costs of capital and the weighted average cost of capital.
17. Compute the operating, financial combined leverage and provide the implications for decision making.
Valuation and Rates of Return
1. Describe security valuation and rate of return.
2. Define and measure the risk and rates of return through the capital asset pricing model.
3. Use certain stock and bond valuation models.
4. Describe the basic process used to value bonds, find their yield to maturity, and yield to call
5. Describe the relationship that exists in bond valuation and its implication for investors.
6. Calculate the expected and required rate of return for stocks.
7. Review concepts of valuation for entrepreneurial ventures and possible funding sources for them.
8. Explain the calculation of the Capital Asset Pricing Model (CAPM) and integrate the results in the valuation of a company’s stock.
Financial Analysis
1. Identify the role and functions of finance, tools for financial planning, and analysis.
2. Utilize the basic tools of finance in analyzing a company to provide solutions for identified problems.
3. Distinguish between operating cash flows and counting income.
4. Prepare a statement of cash flows
5. Perform financial analysis using financial ratios, DuPont analysis, common size statements, and financial forecasting.
6. Analyze and interpret financial ratios relative to liquidity, asset management, debt management, profitability, and market value.
7. Differentiate between horizontal and vertical analysis.
8. Explain and give examples of solvency and debt service ratios.
9. Explain the DuPont system.
10. Explain the concepts of financial forecasting.
11. Calculate and discuss break-even analysis.
12. Discuss and give examples of leverage
13. Detail the use of operating leverage.
Capital Investment Decisions
1. Evaluate the effect of credit markets on a company’s ability to finance its operations
2. Discuss the effect of currency fluctuations as they impact a company’s finances and investment rating.
3. Discuss types of investment and planning horizons.
4. Consider the challenges of managing and funding growth.
5. Describe the difference between the funder’s perspectives and those of the company being financed.
6. Appreciate the difference between venture capital, private equity, early stage, and traditional financing sources.
7. Allocate a limited budget to capital investment projects.
8. Discuss how to incorporate risk in capital investment decisions.
9. Explain the nature of capital investment.
Financial Risks and Returns
1. Define market risk and diversifiable risk.
2. Discuss the relation between risk and return and its implication for investors
3. Determine the breakeven point and name the assumptions and implications.
4. Explain and list various types of risk.
5. Discuss and define return.
6. Explain the concept of risk-return trade-off.
7. Explain the nature of risk management.
8. Explain the role of ethics in risk management.
9. Develop and evaluate a risk-management program.
10. Discuss the nature of risk control (e.g., internal and external).
11. Explain ways to assess risk.
International Finance
1. . Identify the issues to consider when investing in foreign money market securities.
2. Describe how and why exchange rates move.
3. Evaluate the impact of capital inflows and capital outflows.
4. State pros and cons of the International Monetary Fund.
5. Examine strategies for considering international growth.
6. Explain the use of trade credit.


PBL Program of Study
Accounting & Finance


States may submit up to 3 entries.
Competitors must be registered for NLC and pay registration fee.
Competitors must pay dues by 11:59 p.m. Eastern on April 15.


Test: 1 hour