ETS MBA Sample Questions and Answers Corrrect!!

Which of the following organizations is most likely to use project financing? - ANSWERSA large public utility involved in infrastructure development After an extensive recruitment process to select well-qualified individuals, a large percent ofa company's new hires resigned within the first month of the job. Which of the following is the most likely explanation for this situation? - ANSWERSThe training process to prepare the new hires for their assigned tasks was inadequate. Prosco Ltd. employs a process cost system. Inspection of units occurs at the 50 percent mark. Defective units are then removed from the process, and their cost ($4.50) is absorbed by the good units. Prosco has recently been approached by a firm wishing to buy the defective units for a special use. The firm would require Prosco to modify the defective units at a unit cost of $2.00. If Prosco sells the defective units to the firm for $5.00 each, how would Prosco's reported income be affected? - ANSWERSIt would increase by $3.00 per unit sold. Some companies have little, if any, net income or earnings, yet they seem to have all the money they need for capital expenditures. Which of the following best explains how such companies operate? - ANSWERSThey have good cash flows The Sintar Corporation has just announced that it will pay $1.10 per share in dividends to its stockholders in the current quarter. The prior quarter's dividend was $1.00 per share. The announcement indicates which of the following? - ANSWERSManagement is sending a signal that the company has good projected future earnings Wave Inc. is a telecommunications company that wants to become involved in e-commerce. It has to decide whether to develop a business-to-business or business-to-consumer strategy. As Wave's strategic planner, you have been asked to develop a business plan for each opportunity and present these to senior management. The answer to which of the following questions is most important to know before starting your plan? - ANSWERSWhat are the company's core competencies? If you were the holder of a call option (having cost you $2) on some stock with an exercise price of $20, it would be best for you to exercise your option when the market price is at - ANSWERS$24 Increased globalization and technological change, particularly in telecommunications, enable more organizations to adopt which of the following organizational structures? - ANSWERSNetwork A new local Super Store publicly announced that when more than three people are standing in line at cash registers, additional checkout-lines will be opened. After the announcement, customers quickly noticed that the additional lines were not opened until six or seven people were standing in line. This indicates a gap between - ANSWERSactual service delivery and how service quality was communicated All of the following can be considered in the evaluation of a business unit EXCEPT - ANSWERSprojected annual revenues of competitors The sales division of a corporation is considering an internal product transfer because of excess demand. What is the lowest acceptable transfer price for the product? - ANSWERSThe difference between the market price and the costs recaptured by transferring internally Which security makes the most prudent investment? - ANSWERSY The building rents arise from long-term leases that cannot be cancelled. If The Mart closed down this division, what would be the increase in company profits? - ANSWERS1,200,000 Using manufacturing-based criteria to measure product quality, which of the following should you monitor on a regular basis? - ANSWERSThe conformance of the finished product to agreed-to product specifications The common stock of ABC, Inc. has a current market price of $52 per share. Dividends have been $5 a share for several years and are not expected to change. The dividend yield of the stock of comparable companies is 10%. Which recommendation would you make regarding ABC, Inc. stock? - ANSWERSDon't purchase for more than $50 per share. Increasing a regular quarterly dividend payment may indicate which of the following about a corporation? I. Improved earnings prospects for the firm II. A reduction in agency problems of free cash flow III. A reduction in tax payments for shareholders - ANSWERSI and II only (improved earnings and reduction in agency problems) Littleton, Inc., has fixed costs of $75,000 per month, variable costs of $5 per unit, and a sales price per unitof $30. What is the break-even quantity per month? - ANSWERS3,000 (multiple 3,000 x 30 sales price and subtract 3,000 x 5 variable cost) Which of the following should be reported net of tax on a corporation's income statement? - ANSWERSDiscontinued operations If a multinational company cannot change the level of political risk in foreign markets, which of the following tactics would most likely offset possible losses? - ANSWERSFinance debt locally