ETS MAJOR FIELD TEST MBA
QUESTIONS AND ANSWERS
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 - correct answers - D. A large public utility involved in infrastructure
development
After an extensive recruitment process to select well-qualified individuals, a large percent of a 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 hire was not competitive with that of the rest of the industry.
D. The new hires lacked the basic skills required to learn the job. - correct answers - 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 goods 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 cost unit of $2.00. If presco 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 decrease by $3.00 per unit sold
D. It would decrease by $5.00 per unit sold - correct answers - C. It would decrease 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. - correct answers - 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 if the following?
A. Management is sending a signal that it expects the economy to expand.
B. Management is sending a signal that the company has good projected 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. - correct answers - B. Management
is sending a signal that the company has good projected 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-commerce capabilities? - correct answers - 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
QUESTIONS AND ANSWERS
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 - correct answers - D. A large public utility involved in infrastructure
development
After an extensive recruitment process to select well-qualified individuals, a large percent of a 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 hire was not competitive with that of the rest of the industry.
D. The new hires lacked the basic skills required to learn the job. - correct answers - 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 goods 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 cost unit of $2.00. If presco 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 decrease by $3.00 per unit sold
D. It would decrease by $5.00 per unit sold - correct answers - C. It would decrease 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. - correct answers - 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 if the following?
A. Management is sending a signal that it expects the economy to expand.
B. Management is sending a signal that the company has good projected 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. - correct answers - B. Management
is sending a signal that the company has good projected 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-commerce capabilities? - correct answers - 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
