ETS Major Field Test Questions And
Solutions Scored A+.
Which of the following organizations is most likely to use project financing?
(A) A small start-up
(B) A financial services firm with an extensive
client list
(C) A large consumer goods company
(D) A large public utility involved in infrastructure development - Answer (D) A 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?
(A) The training process to prepare the new hires for their assigned tasks was inadequate.
(B) The health benefits provided by the company were not competitive with those of the rest of the
industry.
(C) The starting salary for the new hires was not competitive with that of the rest of the industry.
(D) The new hires lacked the basic skills required to learn the job. - Answer (A) The 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?
(A) It would decrease by $4.50 per unit sold.
(B) It would decrease by $1.50 per unit sold.
(C) It would increase by $3.00 per unit sold. term-40
(D) It would increase by $5.00 per unit sold. - Answer (C) It 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?
(A) They have good cash flows.(B) They lease capital equipment that does not
show up on balance sheets.
(C) They have accounts with many different
banks.
(D) They issue warrants to their officers. - Answer (A) They 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?
(A) Management is sending a signal that it expects the economy to expand.
(B) Management is sending a signal that the comterm-40pany has good projected future earnings.
(C) While the company was able to pay a higher dividend, management preferred a more conservative
figure.
(D) The company has overextended its cash position and may have liquidity problems in the future. -
Answer (B) Management is sending a signal that the comterm-40pany 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?
(A) What are the company's core competencies?
(B) What is the potential market size?
(C) What is the impact on the estimated revenue?
(D) Does the company have e-commercecapabilities? - Answer (A) What 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
(A) $18
Solutions Scored A+.
Which of the following organizations is most likely to use project financing?
(A) A small start-up
(B) A financial services firm with an extensive
client list
(C) A large consumer goods company
(D) A large public utility involved in infrastructure development - Answer (D) A 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?
(A) The training process to prepare the new hires for their assigned tasks was inadequate.
(B) The health benefits provided by the company were not competitive with those of the rest of the
industry.
(C) The starting salary for the new hires was not competitive with that of the rest of the industry.
(D) The new hires lacked the basic skills required to learn the job. - Answer (A) The 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?
(A) It would decrease by $4.50 per unit sold.
(B) It would decrease by $1.50 per unit sold.
(C) It would increase by $3.00 per unit sold. term-40
(D) It would increase by $5.00 per unit sold. - Answer (C) It 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?
(A) They have good cash flows.(B) They lease capital equipment that does not
show up on balance sheets.
(C) They have accounts with many different
banks.
(D) They issue warrants to their officers. - Answer (A) They 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?
(A) Management is sending a signal that it expects the economy to expand.
(B) Management is sending a signal that the comterm-40pany has good projected future earnings.
(C) While the company was able to pay a higher dividend, management preferred a more conservative
figure.
(D) The company has overextended its cash position and may have liquidity problems in the future. -
Answer (B) Management is sending a signal that the comterm-40pany 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?
(A) What are the company's core competencies?
(B) What is the potential market size?
(C) What is the impact on the estimated revenue?
(D) Does the company have e-commercecapabilities? - Answer (A) What 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
(A) $18
