File: chapter8TestBank.docx, Chapter 8, The Business of Information Technology
Multiple Choice
1. Which of the following plans is designed to counter a manmade or natural disaster that
could cripple an enterprise?
a) Business Continuity Plan
b) Disaster Recovery Plan
c) Business Disaster Plan
d) Disaster Business Case
e) Business-IT Maturity
Model Ans: a (Medium)
2. Which of the following should a manager expect from the IS organization?
a) Promoting enterprise security.
b) Participating in setting and implementing strategic direction.
c) Innovating current processes.
d) Managing data, information and knowledge
e) All of the above
Ans: e (Hard)
3. According to the research by Peter Weill, a firm that boosts investments in infrastructure
is typical of those firms with a focus on (1) and a firm that boosts investments in
transaction systems is typical of those firms with a focus on (2)
a) (1) transactions (2) connections
b) (1) savings (2) expansion
c) (1) cost (2) ability
d) (1) agility (2) cost
e) (1) ability (2)
agility Ans: d (Medium)
4. The responsibility of the IT organization is to:
a) Manage core business functions like selling, accounting and manufacturing.
b) Partner with business managers to ensure the right IS exists to support the business
strategy.
c) Set the business strategy.
, d) Have sole responsibility for building information systems for the organization.
e) Design business processes.
Ans: b (Medium)
5. A company that seeks an IT portfolio that lowers costs as the primary business objective will
be more likely to increase spending on because these applications can help
automate processes.
a) strategic systems
b) infrastructure
c) informational systems
d) transactional systems
e) social media
Ans: d (Hard)
6. Which method of IT funding is the most equitable, as the costs associated with IT are based
on use?
a) Allocation
b) Corporate budgeting
c) Usage
d) Distributed
e) Chargeback
Ans: e (Medium)
7. Sam has just purchased 10 new high speed color laser printers for his company. He is very
excited because he got a 40% discount and paid only $2,990 for each unit. His boss, Joe, wants
to know things such as operating costs, support, overhead, etc. for the printers. Joe wants to
know which value?
a) RCO
b) TCO
c) ROI
d) NPV
e) EVM
Ans: b (Hard)
8. Activity-based costing
a) groups costs into meaningful buckets that are then distributed based on the activity or
product they support.
b) is useful for allocating small project work.
, c) charges all costs to “cost centers.”
d) considers only initial capital investments.
e) calculates ongoing maintenance costs.
Ans: a (Hard)
9. Which financial calculation provides a percentage rate that measures the relationship between
the amount the business gets back from an investment and the amount invested?
a) IRR
b) ROI
c) Payback
d) NPV
e) EVA
Ans: b (Medium)
10. Scorecards provide a summary of information gathered over a period of time.
Another common IT monitoring tool is the:
a) baseline
b) metrics
c) portfolio
d) dashboard
e) monitor
Ans: d (Medium)
11. Joe works for a company where the IT department charges him for the number of CRM
login accounts that are in his department. What type of IT funding model is his company
deploying?
a) Allocation
b) Corporate budgeting
c) Usage
d) TCO
e) Chargeback
Ans: a (Medium)
12. Denise works for a company where the IT department charges her department for actual
usage of a SharePoint server, determining how often users log in and how much storage
space her department consumes. What type of IT funding model is the company deploying?
a) Allocation method
b) Corporate budget method
c) Usage method
, d) Distributed method
e) Chargeback method
Ans: e (Medium)
13. To justify an IT investment and receive necessary support and approval, a manager
must often create a(n):
a) IT portfolio.
b) community plan.
c) business case.
d) workflow diagram.
e) business technology plan.
Ans: c (Medium)
14. Building a business case for an IT investment:
a) Allows management to establish priorities for investing in different projects.
b) Helps gain commitment for the IT investment from business managers.
c) Creates a basis for monitoring the investment.
d) Identifies the benefits of the investment.
e) All of the above.
Ans: e (Medium)
15. Critical to the business case is the identification of both and .
a) costs; risks
b) costs; benefits
c) advantages; disadvantages
d) assumptions; risks
e) benefits; detriments
Ans: b (Medium)
16. A local marketing firm is considering launching a new and extensive social media marketing
campaign. This investment of resources is being looked at for the duration of the project since it
is anticipated to last at least 5 years. What financial calculation should be used to compute the
investment’s value, taking into account the time value of money?
a) ROI
b) NPV
c) EVA
d) IRR
e) TCO
Multiple Choice
1. Which of the following plans is designed to counter a manmade or natural disaster that
could cripple an enterprise?
a) Business Continuity Plan
b) Disaster Recovery Plan
c) Business Disaster Plan
d) Disaster Business Case
e) Business-IT Maturity
Model Ans: a (Medium)
2. Which of the following should a manager expect from the IS organization?
a) Promoting enterprise security.
b) Participating in setting and implementing strategic direction.
c) Innovating current processes.
d) Managing data, information and knowledge
e) All of the above
Ans: e (Hard)
3. According to the research by Peter Weill, a firm that boosts investments in infrastructure
is typical of those firms with a focus on (1) and a firm that boosts investments in
transaction systems is typical of those firms with a focus on (2)
a) (1) transactions (2) connections
b) (1) savings (2) expansion
c) (1) cost (2) ability
d) (1) agility (2) cost
e) (1) ability (2)
agility Ans: d (Medium)
4. The responsibility of the IT organization is to:
a) Manage core business functions like selling, accounting and manufacturing.
b) Partner with business managers to ensure the right IS exists to support the business
strategy.
c) Set the business strategy.
, d) Have sole responsibility for building information systems for the organization.
e) Design business processes.
Ans: b (Medium)
5. A company that seeks an IT portfolio that lowers costs as the primary business objective will
be more likely to increase spending on because these applications can help
automate processes.
a) strategic systems
b) infrastructure
c) informational systems
d) transactional systems
e) social media
Ans: d (Hard)
6. Which method of IT funding is the most equitable, as the costs associated with IT are based
on use?
a) Allocation
b) Corporate budgeting
c) Usage
d) Distributed
e) Chargeback
Ans: e (Medium)
7. Sam has just purchased 10 new high speed color laser printers for his company. He is very
excited because he got a 40% discount and paid only $2,990 for each unit. His boss, Joe, wants
to know things such as operating costs, support, overhead, etc. for the printers. Joe wants to
know which value?
a) RCO
b) TCO
c) ROI
d) NPV
e) EVM
Ans: b (Hard)
8. Activity-based costing
a) groups costs into meaningful buckets that are then distributed based on the activity or
product they support.
b) is useful for allocating small project work.
, c) charges all costs to “cost centers.”
d) considers only initial capital investments.
e) calculates ongoing maintenance costs.
Ans: a (Hard)
9. Which financial calculation provides a percentage rate that measures the relationship between
the amount the business gets back from an investment and the amount invested?
a) IRR
b) ROI
c) Payback
d) NPV
e) EVA
Ans: b (Medium)
10. Scorecards provide a summary of information gathered over a period of time.
Another common IT monitoring tool is the:
a) baseline
b) metrics
c) portfolio
d) dashboard
e) monitor
Ans: d (Medium)
11. Joe works for a company where the IT department charges him for the number of CRM
login accounts that are in his department. What type of IT funding model is his company
deploying?
a) Allocation
b) Corporate budgeting
c) Usage
d) TCO
e) Chargeback
Ans: a (Medium)
12. Denise works for a company where the IT department charges her department for actual
usage of a SharePoint server, determining how often users log in and how much storage
space her department consumes. What type of IT funding model is the company deploying?
a) Allocation method
b) Corporate budget method
c) Usage method
, d) Distributed method
e) Chargeback method
Ans: e (Medium)
13. To justify an IT investment and receive necessary support and approval, a manager
must often create a(n):
a) IT portfolio.
b) community plan.
c) business case.
d) workflow diagram.
e) business technology plan.
Ans: c (Medium)
14. Building a business case for an IT investment:
a) Allows management to establish priorities for investing in different projects.
b) Helps gain commitment for the IT investment from business managers.
c) Creates a basis for monitoring the investment.
d) Identifies the benefits of the investment.
e) All of the above.
Ans: e (Medium)
15. Critical to the business case is the identification of both and .
a) costs; risks
b) costs; benefits
c) advantages; disadvantages
d) assumptions; risks
e) benefits; detriments
Ans: b (Medium)
16. A local marketing firm is considering launching a new and extensive social media marketing
campaign. This investment of resources is being looked at for the duration of the project since it
is anticipated to last at least 5 years. What financial calculation should be used to compute the
investment’s value, taking into account the time value of money?
a) ROI
b) NPV
c) EVA
d) IRR
e) TCO
