ETS MFT MBA EXAM QUESTIONS WITH 100%
CORRECT ANSWERS
• Who is most likely to use project-based financing?
→ A large utility company working on infrastructure developments.
• Why do many new employees quit soon after being hired, even after a
thorough recruitment process?
→ They were not given adequate training for their job responsibilities.
• Prosco Ltd. finds defective units halfway through production. Another
company offers $5 per unit if Prosco fixes them at $2 cost each. Prosco
currently absorbs $4.50 per defective unit into the cost of good ones. How is
income affected by selling the defectives?
→ Profit rises by $3 for each defective unit sold.
• How can companies with little or no net income still fund capital
investments?
→ They maintain healthy cash flow.
• Sintar Corporation increases dividends from $1.00 to $1.10. What does this
imply?
→ Management expects strong future profitability.
• Wave Inc. must decide between B2B and B2C e-commerce strategies. What
should be identified first?
→ The company’s primary strengths or competencies.
• You hold a $2 call option with a $20 strike price. When should you exercise
it?
→ When the stock price hits $24.
, • What organizational structure is supported by globalization and telecom
advancements?
→ A network structure.
• A store promises more checkout lines when 3+ people are waiting but only
adds lines after 6–7 people. What service gap is shown?
→ The gap between actual service and how the service is communicated.
• Which of the following is not a valid metric for evaluating a business unit?
→ Competitors’ projected yearly revenue.
• A company is transferring products internally due to high demand. What’s the
minimum transfer price?
→ The market price minus the costs recovered by doing the transfer internally.
• A retail division projects a $4.4M loss. Of its $7.4M in operating costs, only
$1.2M (utilities) is avoidable. What’s the profit effect of closing it?
→ Profits improve by $1.2M.
• Which measure aligns with the manufacturing definition of product quality?
→ Whether products meet agreed-upon specifications.
• ABC Inc. stock is $52, with a steady $5 dividend. Peers yield 10%. Should
you buy?
→ Only if it’s priced under $50.
• Raising quarterly dividends may signal which of the following?
→ (1) Better future earnings; (2) Lower agency issues from excess cash.
→ Correct answer: Both 1 and 2.
• A firm has $75K fixed monthly costs, $5 variable cost/unit, and sells at
$30/unit. What’s the break-even quantity?
→ 3,000 units.
• Which income item is shown net of tax on a company’s income statement?
→ Discontinued operations.
• How can multinational firms offset political risk abroad?
→ Borrow funds locally in the foreign market.
CORRECT ANSWERS
• Who is most likely to use project-based financing?
→ A large utility company working on infrastructure developments.
• Why do many new employees quit soon after being hired, even after a
thorough recruitment process?
→ They were not given adequate training for their job responsibilities.
• Prosco Ltd. finds defective units halfway through production. Another
company offers $5 per unit if Prosco fixes them at $2 cost each. Prosco
currently absorbs $4.50 per defective unit into the cost of good ones. How is
income affected by selling the defectives?
→ Profit rises by $3 for each defective unit sold.
• How can companies with little or no net income still fund capital
investments?
→ They maintain healthy cash flow.
• Sintar Corporation increases dividends from $1.00 to $1.10. What does this
imply?
→ Management expects strong future profitability.
• Wave Inc. must decide between B2B and B2C e-commerce strategies. What
should be identified first?
→ The company’s primary strengths or competencies.
• You hold a $2 call option with a $20 strike price. When should you exercise
it?
→ When the stock price hits $24.
, • What organizational structure is supported by globalization and telecom
advancements?
→ A network structure.
• A store promises more checkout lines when 3+ people are waiting but only
adds lines after 6–7 people. What service gap is shown?
→ The gap between actual service and how the service is communicated.
• Which of the following is not a valid metric for evaluating a business unit?
→ Competitors’ projected yearly revenue.
• A company is transferring products internally due to high demand. What’s the
minimum transfer price?
→ The market price minus the costs recovered by doing the transfer internally.
• A retail division projects a $4.4M loss. Of its $7.4M in operating costs, only
$1.2M (utilities) is avoidable. What’s the profit effect of closing it?
→ Profits improve by $1.2M.
• Which measure aligns with the manufacturing definition of product quality?
→ Whether products meet agreed-upon specifications.
• ABC Inc. stock is $52, with a steady $5 dividend. Peers yield 10%. Should
you buy?
→ Only if it’s priced under $50.
• Raising quarterly dividends may signal which of the following?
→ (1) Better future earnings; (2) Lower agency issues from excess cash.
→ Correct answer: Both 1 and 2.
• A firm has $75K fixed monthly costs, $5 variable cost/unit, and sells at
$30/unit. What’s the break-even quantity?
→ 3,000 units.
• Which income item is shown net of tax on a company’s income statement?
→ Discontinued operations.
• How can multinational firms offset political risk abroad?
→ Borrow funds locally in the foreign market.
