ETS Major Field Test (Practice Test):
Bachelor's Degree in Business Correct
Questions And Answers
The common characteristic possessed by all assets is
a) Long life
b) Great monetary value
c) Tangible nature
d) Future economic benefit Correct Answers d) Future economic benefit
Which Foreign Direct Investment (FDI) attempts to acquire particular resources at a
lower real cost than could be obtained in the home country?
a) Market-seeking FDI
b) Efficiency-seeking FDI
c) Resource-seeking FDI
d) Strategic asset-seeking FDI Correct Answers c) Resource-seeking FDI
Under the Uniform Commercial Code (UCC) statute of frauds, which of the following
terms must be included in writing in order to satisfy the writing requirement?
a) The price of the goods.
b) The quantity of the goods.
c) The signatures and names of the buyer and the seller
d) The time and place for delivery Correct Answers b) The quantity of the goods
Which of the following is an appropriate Federal Reserve action to stimulate the United
States economy?
a) Selling government bonds on the open market
b) Increasing the discount rate
c) Reducing the reserve requirement
d) Cutting taxes Correct Answers c) Reducing the reserve requirement
Which of the following is true with regard to an exculpatory clause?
a) An exculpatory clause excuses one party from liability for his/her own tortious
conduct.
b) Where one party has a superior bargaining position that has enabled him/her to
impose an exculpatory clause upon the other, the courts are inclined to nullify the
provision.
,c) An exculpatory clause may be unenforceable for unconscionability.
d) All of the above are true Correct Answers d) All of the above are true
Managers at ABC, Inc. analyze the current situation of their organization and then
develop plans to help their organization to accomplish its mission and achieve its goals.
This is known as:
a) Synergy planning
b) Strategy formulation
c) Functional planning
d) SWOT analysis Correct Answers b) Strategy formulation
A group that develops naturally as a result of employees' interaction within an
organization is referred to as
a) an informal group
b) a formal group
c) a work-team group
d) a formation group Correct Answers a) an informal group
When employees use email, word processors, electronic scheduling / calendars, they
are using which of the following?
a) Transaction processing systems
b) Process control systems
c) Office automation systems
d) Decision support systems Correct Answers c) Office automation systems
A standard procedure for numerically measuring a project's progress, forecasting its
completion date and cost and providing measures of schedule and budget variation as
activities are completed is referred to as
a) program evaluation and review technique (PERT)
b) the critical path method (CPM)
c) a Gantt chart
d) earned value analysis (EVA) Correct Answers d) earned value analysis (EVA)
High product differentiation is generally accompanied by
a) higher market share
b) decreased emphasis on competition based on price
c) higher profit margins and lower costs
d) significant economies of scale Correct Answers b) decreased emphasis on
competition based on price
,The essence of common law is:
a) its prospective nature.
b) the concept of stare decisis
c) its flexibility
d) the plain meaning doctrine Correct Answers b) the concept of stare decisis
The Organization of the Petroleum Exporting Countries (OPEC) reduces production by
10 percent, and the growth rate of the world economy begins to escalate. How will the
simultaneous occurrence of these events affect the equilibrium price and quantity in the
world
petroleum market?
a) Price will increase, but quantity will remain unchanged
b) Price will increase, but quantity is indeterminate
c) Quantity will increase, but price is indeterminate
d) Both price and quantity will increase Correct Answers b) Price will increase, but
quantity is indeterminate
Within the context of the capital asset pricing model (CAPM), the risk measure known
as beta is often computed by regressing the return of the company's stock against the
a) return on the company's bonds
b) return on the market portfolio
c) change in the gross domestic product
d) change in the consumer price index Correct Answers b) return on the market portfolio
If the spread between the spot and forward exchange rates of two currencies equals the
interest rate difference between the two countries, this phenomenon is referred to as
a) purchasing-power equality
b) commodity arbitrage
c) currency hedging
d) interest-rate parity Correct Answers d) interest-rate parity
Douglass Interiors is considering two mutually exclusive projects and have determined
that the crossover rate for these projects is 11.7 percent. Project A has an internal rate
of return (IRR) of 15.3 percent and Project B has an IRR of 16.5 percent. Given this
information, which one of the following statements is correct?
a) Project A should be accepted as its IRR is closer to the crossover point than is
Project B's IRR.
b) Project B should be accepted as it has the higher IRR.
, c) Both projects should be accepted as both of the project's IRRs exceed the crossover
rate.
d) Neither project should be accepted since both of the project's IRRs exceed the
crossover rate.
e) You cannot determine which project should be accepted given the information
provided. Correct Answers e) You cannot determine which project should be accepted
given the information provided.
A small number of people with complementary skills who are committed to a common
purpose, a set of performance goals, and an approach for which they hold themselves
mutually accountable is referred to as a
a) committee
b) task force
c) group
d) team Correct Answers d) team
Manufacturing overhead includes:
a) all direct material, direct labor and administrative costs
b) all manufacturing costs except direct labor
c) all manufacturing costs except direct labor and direct materials
d) all selling and administrative costs Correct Answers c) all manufacturing costs except
direct labor and direct materials
Sue and Neal are twins. Sue invests $5,000 at 7 percent when she is 25 years old. Neal
invests $5,000 at 7 percent when he is 30 years old. Both investments compound
interest annually. Both Sue and Neal retire at age 60. Which one of the following
statements is correct assuming that neither Sue nor Neal has withdrawn any money
from their accounts?
a) Sue will have less money when she retires than Neal.
b) Neal will earn more interest on interest than Sue.
c) Neal will earn more compound interest than Sue.
d) If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of
savings.
Bachelor's Degree in Business Correct
Questions And Answers
The common characteristic possessed by all assets is
a) Long life
b) Great monetary value
c) Tangible nature
d) Future economic benefit Correct Answers d) Future economic benefit
Which Foreign Direct Investment (FDI) attempts to acquire particular resources at a
lower real cost than could be obtained in the home country?
a) Market-seeking FDI
b) Efficiency-seeking FDI
c) Resource-seeking FDI
d) Strategic asset-seeking FDI Correct Answers c) Resource-seeking FDI
Under the Uniform Commercial Code (UCC) statute of frauds, which of the following
terms must be included in writing in order to satisfy the writing requirement?
a) The price of the goods.
b) The quantity of the goods.
c) The signatures and names of the buyer and the seller
d) The time and place for delivery Correct Answers b) The quantity of the goods
Which of the following is an appropriate Federal Reserve action to stimulate the United
States economy?
a) Selling government bonds on the open market
b) Increasing the discount rate
c) Reducing the reserve requirement
d) Cutting taxes Correct Answers c) Reducing the reserve requirement
Which of the following is true with regard to an exculpatory clause?
a) An exculpatory clause excuses one party from liability for his/her own tortious
conduct.
b) Where one party has a superior bargaining position that has enabled him/her to
impose an exculpatory clause upon the other, the courts are inclined to nullify the
provision.
,c) An exculpatory clause may be unenforceable for unconscionability.
d) All of the above are true Correct Answers d) All of the above are true
Managers at ABC, Inc. analyze the current situation of their organization and then
develop plans to help their organization to accomplish its mission and achieve its goals.
This is known as:
a) Synergy planning
b) Strategy formulation
c) Functional planning
d) SWOT analysis Correct Answers b) Strategy formulation
A group that develops naturally as a result of employees' interaction within an
organization is referred to as
a) an informal group
b) a formal group
c) a work-team group
d) a formation group Correct Answers a) an informal group
When employees use email, word processors, electronic scheduling / calendars, they
are using which of the following?
a) Transaction processing systems
b) Process control systems
c) Office automation systems
d) Decision support systems Correct Answers c) Office automation systems
A standard procedure for numerically measuring a project's progress, forecasting its
completion date and cost and providing measures of schedule and budget variation as
activities are completed is referred to as
a) program evaluation and review technique (PERT)
b) the critical path method (CPM)
c) a Gantt chart
d) earned value analysis (EVA) Correct Answers d) earned value analysis (EVA)
High product differentiation is generally accompanied by
a) higher market share
b) decreased emphasis on competition based on price
c) higher profit margins and lower costs
d) significant economies of scale Correct Answers b) decreased emphasis on
competition based on price
,The essence of common law is:
a) its prospective nature.
b) the concept of stare decisis
c) its flexibility
d) the plain meaning doctrine Correct Answers b) the concept of stare decisis
The Organization of the Petroleum Exporting Countries (OPEC) reduces production by
10 percent, and the growth rate of the world economy begins to escalate. How will the
simultaneous occurrence of these events affect the equilibrium price and quantity in the
world
petroleum market?
a) Price will increase, but quantity will remain unchanged
b) Price will increase, but quantity is indeterminate
c) Quantity will increase, but price is indeterminate
d) Both price and quantity will increase Correct Answers b) Price will increase, but
quantity is indeterminate
Within the context of the capital asset pricing model (CAPM), the risk measure known
as beta is often computed by regressing the return of the company's stock against the
a) return on the company's bonds
b) return on the market portfolio
c) change in the gross domestic product
d) change in the consumer price index Correct Answers b) return on the market portfolio
If the spread between the spot and forward exchange rates of two currencies equals the
interest rate difference between the two countries, this phenomenon is referred to as
a) purchasing-power equality
b) commodity arbitrage
c) currency hedging
d) interest-rate parity Correct Answers d) interest-rate parity
Douglass Interiors is considering two mutually exclusive projects and have determined
that the crossover rate for these projects is 11.7 percent. Project A has an internal rate
of return (IRR) of 15.3 percent and Project B has an IRR of 16.5 percent. Given this
information, which one of the following statements is correct?
a) Project A should be accepted as its IRR is closer to the crossover point than is
Project B's IRR.
b) Project B should be accepted as it has the higher IRR.
, c) Both projects should be accepted as both of the project's IRRs exceed the crossover
rate.
d) Neither project should be accepted since both of the project's IRRs exceed the
crossover rate.
e) You cannot determine which project should be accepted given the information
provided. Correct Answers e) You cannot determine which project should be accepted
given the information provided.
A small number of people with complementary skills who are committed to a common
purpose, a set of performance goals, and an approach for which they hold themselves
mutually accountable is referred to as a
a) committee
b) task force
c) group
d) team Correct Answers d) team
Manufacturing overhead includes:
a) all direct material, direct labor and administrative costs
b) all manufacturing costs except direct labor
c) all manufacturing costs except direct labor and direct materials
d) all selling and administrative costs Correct Answers c) all manufacturing costs except
direct labor and direct materials
Sue and Neal are twins. Sue invests $5,000 at 7 percent when she is 25 years old. Neal
invests $5,000 at 7 percent when he is 30 years old. Both investments compound
interest annually. Both Sue and Neal retire at age 60. Which one of the following
statements is correct assuming that neither Sue nor Neal has withdrawn any money
from their accounts?
a) Sue will have less money when she retires than Neal.
b) Neal will earn more interest on interest than Sue.
c) Neal will earn more compound interest than Sue.
d) If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of
savings.
