1|Page
PEREGRINE ACTUAL EXAM 2026 ALL
QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALE | RATED
A+ | NEW AND REVISED
1. Which of the following best defines strategic management in a
business context?
A. The day-to-day operational activities of a company
B. The formulation and implementation of long-term goals to
achieve competitive advantage
C. The process of hiring and training employees
D. The creation of short-term marketing campaigns
Rationale: Strategic management involves setting long-term objectives
and aligning resources to gain a competitive edge in the market.
2. A company faces declining sales due to emerging competitors.
Which strategy should management prioritize according to
Porter’s Generic Strategies?
A. Cost leadership
B. Differentiation
C. Focus strategy
D. Retrenchment
Rationale: A focus strategy targets a niche market, allowing a
company to compete effectively despite strong competitors.
3. A manager notices employees are demotivated due to lack of
recognition. According to Maslow’s hierarchy of needs, which
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need is primarily unfulfilled?
A. Physiological
B. Safety
C. Esteem
D. Self-actualization
Rationale: Esteem needs involve recognition, achievement, and
respect, which influence employee motivation.
4. Which financial statement provides a snapshot of a company’s
financial position at a specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Rationale: The balance sheet lists assets, liabilities, and equity at a
given date, reflecting financial position.
5. A company produces 10,000 units at a total cost of $50,000. The
variable cost per unit is $3. What is the fixed cost?
A. $20,000
B. $30,000
C. $20,000
D. $50,000
Rationale: Total cost = Fixed cost + (Variable cost × Quantity). Fixed
cost = 50,000 – (3 × 10,000) = 20,000.
6. In marketing, the 4 Ps refer to:
A. Price, Production, Promotion, Placement
B. Product, Price, People, Process
C. Product, Price, Place, Promotion
D. Plan, Process, Performance, People
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Rationale: The marketing mix is defined by product, price, place, and
promotion.
7. A firm wants to expand internationally but minimize risk. Which
entry mode is most appropriate?
A. Direct investment
B. Franchising
C. Exporting via subsidiaries
D. Joint venture with full ownership
Rationale: Franchising allows international expansion while
transferring most risk to the franchisee.
8. A business ethics scenario: A company discovers a minor safety
flaw in its product. Which ethical principle demands disclosure to
consumers?
A. Utilitarianism
B. Deontology
C. Egoism
D. Cultural relativism
Rationale: Deontology emphasizes duties and rules; the company has
a moral duty to disclose safety risks.
9. Which type of organizational structure groups employees by
function (e.g., marketing, finance, operations)?
A. Divisional
B. Functional
C. Matrix
D. Flat
Rationale: Functional structures organize departments by specialized
roles, facilitating efficiency and expertise.
10. The law requiring public companies to provide accurate
financial reporting is called:
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A. Sarbanes-Oxley Act
B. Securities Exchange Act
C. Dodd-Frank Act
D. Clayton Act
Rationale: The Securities Exchange Act enforces accurate reporting
and transparency for public companies.
11. A firm’s current ratio is 2:1. This indicates:
A. The company has twice as many liabilities as assets
B. The company is highly leveraged
C. The company has twice as many current assets as current
liabilities
D. The company is insolvent
Rationale: Current ratio = Current assets ÷ Current liabilities; a ratio
above 1 indicates good short-term liquidity.
12. Which decision-making style involves seeking input from the
team but making the final decision individually?
A. Autocratic
B. Consultative
C. Democratic
D. Laissez-faire
Rationale: Consultative leaders gather input but retain final decision
authority.
13. Which economic concept explains why increasing production
eventually leads to higher per-unit costs?
A. Economies of scale
B. Diseconomies of scale
C. Opportunity cost
D. Comparative advantage
PEREGRINE ACTUAL EXAM 2026 ALL
QUESTIONS AND CORRECT DETAILED
ANSWERS WITH RATIONALE | RATED
A+ | NEW AND REVISED
1. Which of the following best defines strategic management in a
business context?
A. The day-to-day operational activities of a company
B. The formulation and implementation of long-term goals to
achieve competitive advantage
C. The process of hiring and training employees
D. The creation of short-term marketing campaigns
Rationale: Strategic management involves setting long-term objectives
and aligning resources to gain a competitive edge in the market.
2. A company faces declining sales due to emerging competitors.
Which strategy should management prioritize according to
Porter’s Generic Strategies?
A. Cost leadership
B. Differentiation
C. Focus strategy
D. Retrenchment
Rationale: A focus strategy targets a niche market, allowing a
company to compete effectively despite strong competitors.
3. A manager notices employees are demotivated due to lack of
recognition. According to Maslow’s hierarchy of needs, which
,2|Page
need is primarily unfulfilled?
A. Physiological
B. Safety
C. Esteem
D. Self-actualization
Rationale: Esteem needs involve recognition, achievement, and
respect, which influence employee motivation.
4. Which financial statement provides a snapshot of a company’s
financial position at a specific point in time?
A. Income statement
B. Statement of cash flows
C. Balance sheet
D. Statement of retained earnings
Rationale: The balance sheet lists assets, liabilities, and equity at a
given date, reflecting financial position.
5. A company produces 10,000 units at a total cost of $50,000. The
variable cost per unit is $3. What is the fixed cost?
A. $20,000
B. $30,000
C. $20,000
D. $50,000
Rationale: Total cost = Fixed cost + (Variable cost × Quantity). Fixed
cost = 50,000 – (3 × 10,000) = 20,000.
6. In marketing, the 4 Ps refer to:
A. Price, Production, Promotion, Placement
B. Product, Price, People, Process
C. Product, Price, Place, Promotion
D. Plan, Process, Performance, People
,3|Page
Rationale: The marketing mix is defined by product, price, place, and
promotion.
7. A firm wants to expand internationally but minimize risk. Which
entry mode is most appropriate?
A. Direct investment
B. Franchising
C. Exporting via subsidiaries
D. Joint venture with full ownership
Rationale: Franchising allows international expansion while
transferring most risk to the franchisee.
8. A business ethics scenario: A company discovers a minor safety
flaw in its product. Which ethical principle demands disclosure to
consumers?
A. Utilitarianism
B. Deontology
C. Egoism
D. Cultural relativism
Rationale: Deontology emphasizes duties and rules; the company has
a moral duty to disclose safety risks.
9. Which type of organizational structure groups employees by
function (e.g., marketing, finance, operations)?
A. Divisional
B. Functional
C. Matrix
D. Flat
Rationale: Functional structures organize departments by specialized
roles, facilitating efficiency and expertise.
10. The law requiring public companies to provide accurate
financial reporting is called:
, 4|Page
A. Sarbanes-Oxley Act
B. Securities Exchange Act
C. Dodd-Frank Act
D. Clayton Act
Rationale: The Securities Exchange Act enforces accurate reporting
and transparency for public companies.
11. A firm’s current ratio is 2:1. This indicates:
A. The company has twice as many liabilities as assets
B. The company is highly leveraged
C. The company has twice as many current assets as current
liabilities
D. The company is insolvent
Rationale: Current ratio = Current assets ÷ Current liabilities; a ratio
above 1 indicates good short-term liquidity.
12. Which decision-making style involves seeking input from the
team but making the final decision individually?
A. Autocratic
B. Consultative
C. Democratic
D. Laissez-faire
Rationale: Consultative leaders gather input but retain final decision
authority.
13. Which economic concept explains why increasing production
eventually leads to higher per-unit costs?
A. Economies of scale
B. Diseconomies of scale
C. Opportunity cost
D. Comparative advantage
