ETS MBA Sample Questions and Answers
Which of the following organizations is most likely to use project financing? - answer 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? - answer 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? - answer 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? - answerThey 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? - answerManagement 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? - answerWhat 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 - answer$24
Increased globalization and technological change, particularly in telecommunications,
enable more organizations to adopt which of the following organizational structures? -
answerNetwork
, 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 - answeractual
service delivery and how service quality
was communicated
All of the following can be considered in the evaluation of a business unit EXCEPT -
answerprojected 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? -
answerThe difference between the market price and the costs recaptured by
transferring internally
Which security makes the most prudent investment? - answerY
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? -
answer1,200,000
Using manufacturing-based criteria to measure product quality, which of the following
should you monitor on a regular basis? - answerThe 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? - answerDon'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 - answerI 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? - answer3,000
(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? - answerDiscontinued operations
Which of the following organizations is most likely to use project financing? - answer 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? - answer 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? - answer 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? - answerThey 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? - answerManagement 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? - answerWhat 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 - answer$24
Increased globalization and technological change, particularly in telecommunications,
enable more organizations to adopt which of the following organizational structures? -
answerNetwork
, 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 - answeractual
service delivery and how service quality
was communicated
All of the following can be considered in the evaluation of a business unit EXCEPT -
answerprojected 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? -
answerThe difference between the market price and the costs recaptured by
transferring internally
Which security makes the most prudent investment? - answerY
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? -
answer1,200,000
Using manufacturing-based criteria to measure product quality, which of the following
should you monitor on a regular basis? - answerThe 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? - answerDon'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 - answerI 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? - answer3,000
(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? - answerDiscontinued operations
