ETS MBA MFT Exam – Latest Questions and Correct Answers (2026 Edition)

ETS MBA MFT Exam – Latest Questions
and Correct Answers (2026 Edition)

ETS MBA MFT Practice Exam – Section 1 (Multiple Choice)
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1. A company currently has a current ratio of 1.5 and a quick ratio of 0.8. Which of the f
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ollowing actions would most likely increase the quick ratio?
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a) Purchasing inventory with cash
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b) Paying off accounts payable with cash
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c) Selling inventory on account at a profit
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d) Collecting accounts receivable
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Correct answer: c) Selling inventory on account increases accounts receivable (a quick asset) a
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nd reduces inventory (not a quick asset), raising the quick ratio.
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2. A firm’s weighted average cost of capital (WACC) is 10%. It is considering a project wi
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th the following expected cash flows:
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Year 0: -$1,000 bn bn




Year 1: $300 bn bn




Year 2: $400 bn bn




Year 3: $500 bn bn




What is the project’s Net Present Value (NPV)?
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a) -$47.80
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b) $0.00
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c) $47.80
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d) $200.00
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Correct answer: c) $47.80 bn bn bn




(Calculation: NPV = -1000 + 300/1.10 + 400/1.10² + 500/1.10³ = -
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1000 + 272.73 + 330.58 + 375.66 = 47.80)
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3. Which pricing strategy is most appropriate when a company introduces a new product
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with strong barriers to competition and high initial demand?
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a) Penetration pricing
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b) Skimming pricing
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c) Economy pricing
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d) Loss-leader pricing
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,Correct answer: b) Skimming pricing sets high initial prices to maximize revenue from early ad
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opters.



4. In path-
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goal theory of leadership, a manager who sets challenging goals and expects high perfor
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mance is using which leadership style?
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a) Supportive leadership
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b) Participative leadership
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c) Achievement-oriented leadership
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d) Directive leadership
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Correct answer: c) Achievement-
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oriented leadership focuses on setting challenging goals and expecting excellence.
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5. A manufacturing firm has fixed costs of $500,000, variable cost per unit of $20, and s
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ells its product for $30 per unit. What is the break-even point in units?
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a) 25,000 units
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b) 50,000 units
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c) 16,667 units
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d) 100,000 units
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Correct answer: b) 50,000 units
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(Calculation: Break-even = Fixed Costs / (Price – Variable Cost) = 500,000 / (30 – 20) = 50,000)
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6. Which financial ratio would be most useful for assessing a company’s ability to meet i
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ts short-term obligations without selling inventory?
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a) Current ratio
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b) Quick ratio
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c) Debt-to-equity ratio
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d) Inventory turnover ratio
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Correct answer: b) Quick ratio excludes inventory, focusing on more liquid assets.
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7. In SWOT analysis, the introduction of a new government regulation that benefits only
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your industry would be classified as:
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a) Strength
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b) Weakness
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,c) Opportunity
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d) Threat
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Correct answer: c) Opportunity —bn bn bn bn




an external environmental factor that could benefit the firm.
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8. Which of the following is a primary disadvantage of a functional organizational struct
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ure?
a) Duplication of resources across departments
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b) Slow decision-making across functions
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c) Lack of specialization
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d) Difficulty in achieving economies of scale
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Correct answer: b) Functional structures can lead to silos and slow cross-functional decisions.
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9. A bond with a face value of $1,000, a coupon rate of 8% paid annually, and 5 years to
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maturity is currently priced at $950. What is its yield to maturity (approximately)?
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a) 8.0%
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b) 8.5%
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c) 9.0%
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d) 9.5%
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Correct answer: d) ~9.5% bn bn bn




(Reason: Price below par → YTM > coupon rate. Approx: [80 + (1000-
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950)/5] / [(1000+950)/2] = (80+10)/975 = 90/975 ≈ 9.23%, closest to 9.5% in options.)
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10. In Michael Porter’s Five Forces model, high supplier power is indicated by:
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a) Many substitute inputs available
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b) Low switching costs for buyers
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c) Suppliers’ products are highly differentiated
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d) Buyers purchase in large volumes
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Correct answer: c) Differentiated supplier products increase supplier power.
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11. A project has an internal rate of return (IRR) of 12%. The firm’s required rate of retu
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rn is 10%. The firm should:
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a) Reject the project because IRR > required return
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b) Accept the project because IRR > required return
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, c) Accept the project only if NPV is negative
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d) Reject the project because IRR < required return
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Correct answer: b) Accept — IRR exceeds the hurdle rate.
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12. Which of the following is a defining characteristic of a matrix organizational structur
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e?
a) Employees report to only one manager
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b) Clear, single line of authority
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c) Dual reporting relationships (functional and project managers)
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d) Strict hierarchy with no cross-functional teams
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Correct answer: c) Matrix structure features dual reporting.
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13. A marketing manager segments the market based on age, income, and education lev
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el. This is an example of:
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a) Psychographic segmentation
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b) Behavioral segmentation
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c) Demographic segmentation
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d) Geographic segmentation
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Correct answer: c) Demographic segmentation uses population characteristics.
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14. If a company has a debt-to-
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equity ratio of 2.0, what percentage of its capital structure is equity?
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a) 33.3%
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b) 50%
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c) 66.7%
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d) 75%
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Correct answer: a) 33.3% bn bn bn




(D/E = 2 → D = 2E → total capital = 3E → E/Total = 1/3 ≈ 33.3%)
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15. According to the BCG matrix, a business unit with low market share in a high-
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growth market is called a: bn bn bn bn




a) Star
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b) Cash cow
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c) Question mark
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d) Dog
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