Business exam 1
47. Which of the following statements is true of a capitalist economy? a. Individuals are free to choose how much they are willing to pay for products. b. Economic equality in the society is of paramount importance. c. The competition in the market is biased in favor of a few businesses. d. Businesses are not free to decide how much they charge for their products.
A
Alfred, a human resource manager at an IT firm, reasons, "Although everyone should be given an equal opportunity, but for once it is fine to give my friend the first shot at the opening in my company because I know he really needs the job." In this context, which of the following statements is most likely true of Alfred? a. He bases his argument on universal ethical standards. b. He views ethics as relative. c. He bases his argument on moral absolutism. d. He believes in value monism.
B
Identify a true statement about exporting. a. It involves buying products domestically that have been produced in foreign nations. b. It represents an especially strong opportunity for small and mid-sized companies. c. It represents the deepest level of global involvement. d. It involves two or more companies joining forces—sharing resources, risks, and profits.
B
In the context of monetary policy, which of the following statements is true of the discount rate? a. The Fed increases it during recessions. b. When the Fed reduces it, interest rates on bank loans tend to fall. c. When the Fed increases it, banks can obtain funds at a lower cost. d. It is the interest rate that the Fed charges on its loans to individuals.
B
The preferred stock of a firm sometimes includes a cumulative feature. This means that: a. holders of preferred stock have a claim on assets that comes before common stockholders if the firm goes out of business. b. if the firm skips a preferred dividend in one period, the amount it must pay the next period is equal to the dividend for that period plus the amount of the dividend it skipped in the previous period. c. the firm must pay any back taxes, legal expenses, wages owed to workers, and debts owed to creditors before the owners of the firm get anything. d. if the firm issues new stock, existing stockholders can purchase new shares in proportion to their existing holdings before the stock is offered to the other investors.
B
Clark and Nestor start a catering business together. They sign a legal contract that states that the business is owned by them. The agreement also states that they will have an equal share in the profits of the business and will be equally liable for any losses incurred by the business. This scenario exemplifies _____. a. a strategic alliance b. countertrade c. a partnership d. barter
C
Regency Placade, a renowned European electronics company, wants to set up a subsidiary in Finim, an Asian country. After conducting a survey, the company finds that Finim lacks the resources required for production. Therefore, Regency Placade decides to abandon the idea. In this scenario, which of the following most likely affected Regency Placade's plan? a. Lack of innovative ideas b. Economic dependence in the international market c. Limited access to factors of production d. Absence of plentiful capital
C
4. Institutional investors amass large pools of financial capital by accepting savings account deposits. a. True b. False
False
In the context of the history of American business, during the entrepreneurship era, _____. a. many industrial titans forced out their competitors b. large-scale entrepreneurs failed to dominate their markets c. the overall standard of living across the country declined rapidly d. the balance of power shifted from producers and toward consumers
A
Samuel assists his clients in investing in the stock market. He not only acts as an agent by buying and selling corporate stocks and bonds on behalf of them, but also provides them with services like financial consultation and market research for a fee. In this scenario, Samuel plays the role of a(n) _____. a. securities broker b. personal investor c. institutional investor d. securities dealer
A
Which of the following is a difference between credit unions and commercial banks? a. Unlike commercial banks, credit unions are not-for-profit organizations. b. Unlike credit unions, commercial banks are nondepository organizations. c. Unlike credit unions, commercial banks are owned by their depositors. d. Unlike commercial banks, credit unions charge very high interest rates on loans.
A
A drawback of actively managed funds is: a. the meagre fee that the professional managers of the funds receive. b. that significant tax consequences occur when there is a lot of trading. c. the difficulty in redeeming shares from the fund. d. the uncertainty of recovering at least a portion of the initial investment.
B
In the context of universal ethical standards, being open-minded and not taking advantage of others exemplifies the core value of _____. a. responsibility b. fairness c. respect d. caring
B
Western Transit Bank has 150 automated teller machines (ATMs) across the country. Customers can use these machines to withdraw money, deposit money in their bank accounts, check their account balance, and transfer money to other accounts. These machines enable Western Transit Bank to carry out some of its operations smoothly. In the given scenario, the ATMs of Western Transit Bank can be classified as _____. a. natural resources b. capital c. human resources d. equity
B
In the context of the global environment of business, which of the following was the outcome of Hurricane Katrina in 2005? a. It had a catastrophic impact on several impoverished African economies that could least afford the hit. b. It decimated the travel industry and led to multibillion-dollar government outlays for Homeland Security. c. It brought the Gulf Coast oil industry to a virtual standstill. d. It dealt a devastating blow to tourism throughout Europe.
C
In the context of the strategies for reaching global markets, which of the following is a key risk of foreign outsourcing? a. Increase in the costs of production b. Exclusion of the brand name of the outsourcer c. Involvement of social responsibility d. Inability to lower labor wages
C
Investors using a(n) _____ often invest in stocks of relatively new companies with innovative products in a hot sector of the economy. a. investing for income strategy b. value investing strategy c. investing for growth strategy d. buy-and-hold strategy
C
Pride of Peers is a bakery chain that specializes in preparing homemade confectionaries. The company donates most of its earnings to rehabilitation centers for war victims and keeps just enough to buy raw materials. The primary goal of the company is to contribute to the rehabilitation of war victims. In this scenario, Pride of Peers would most likely be classified as a _____. a. political organization b. paper organization c. nonprofit organization d. corporation
C
46. The Federal Reserve System was: a. given the responsibility of being a watchdog of the international banking system. b. formed to serve as a district-level bank for all the states in the United States. c. created by the Financial Services Modernization Act of 1999. d. created to serve as the central bank in the United States.
D
Boson Corp., an American software development company, wants to expand its business in international markets. Therefore, it buys property in Greitch, a South Asian country, and sets up a production facility despite the high costs involved. In this scenario, Boson Corp. is most likely involved in _____. a. foreign franchising b. countertrade c. exporting d. direct investment
D
Ellizon Fiber Optics, a publicly traded firm, has approximately 1200 shareholders and $32 million in assets. Given the specifications of the company, the Securities and Exchange Commission (SEC) mandates Ellizon Fiber Optics to: a. pay commissions to the accredited investors. b. undertake insider trading to make profit in business. c. list its stocks in over-the-counter market as it can no longer be listed in NASDAQ. d. file quarterly and annual financial reports with the SEC.
D
In the context of the business environment, the creation of the World Wide Web is considered a component of the _____. a. economic environment b. social environment c. cultural environment d. technological environment
D
Nersina, a European country, exports petroleum and imports cotton and jute. In the current fiscal year, the total value of Nersina's exports is higher than the total value of its imports. In this scenario, Nersina most likely has a _____. a. balance of payments surplus b. trade deficit c. balance of payments deficit d. trade surplus
D
Reese buys securities in a pharmaceutical company for $3300. After a period of eight months, when the prices of the securities go up in the market, she sells her securities for $3700. In this case, the difference of $400 in the prices of the securities is called: a. a price override. b. price dispersion. c. thrift. d. the spread.
D
Which of the following is true of financial diversification? a. Corporate and state laws allow individuals to hold securities only within one market sector and for short periods. b. The practice of holding assorted securities in different sectors is considered highly risky. c. Holding diversified portfolios proves to be cost-effective. d. Investing in a large number of individual securities is time consuming than investing in exchange-traded funds.
D
A bond or share of preferred stock that gives its holder the right to exchange it for a stated number of shares of common stock is referred to as a century bond. a. True b. False
False
Companies that choose to export products to a foreign country spend more to enter that market than companies that choose to build their own factories. a. True b. False
False
Demographic factors include the milestones achieved during the developments in the field of computers, telecommunications, and other digital products.
False
In the context of federal debt, if spending is lower than revenue, the government incurs a budget deficit.
False
In the context of social responsibility, B-Corps receive special tax treatment. a. True b. False
False
Reserve requirement is a rule of the Fed which requires that all of its member banks hold funds which are more than the stated percentage of the deposits held by their customers
False
In the context of career choices, less-routine abilities tend to be more rewarding for most people than routine skills. a. True b. False
True
In the context of creating and maintaining an ethical organization, more-engaged employees are much less likely to behave badly. a. True b. False
True
The consumer market basket of goods and services, in which the consumer price index (CPI) measures the change in weighted-average price over time, is created by the U.S. Bureau of Labor Statistics. a. True b. False
True
A cement company decided to modify its production methods to minimize the negative impact of the company's activities on the environment. The company also invested in the purchase of upgraded machinery to implement this plan. In the given scenario, the cement company most likely embraced the idea of _____. a. sustainable development b. corporate philanthropy c. cause-related marketing d. planned obsolescence
A
Andy invests in Orelon Corp., a plastic manufacturing company. As a stockholder, he owns a part of the company and he holds the right to vote on company issues. However, he is entitled to dividends only when the company's board of directors decides to declare them. According to the company policies, if Orelon Corp. faces dissolution in the future, Andy will receive his assets only after the company satisfies the claim of the preferred stockholders. Based on the given information, it can be concluded that Andy is a _____. a. common stockholder b. cumulative stockholder c. participating stockholder d. convertible stockholder
A
As life spans increase and birth rates decrease, the American population is rapidly aging. This may most likely lead to: a. an increase in taxes as state and federal governments stretch to serve the aging population. b. a decline of companies in fields such as healthcare, pharmaceuticals, and financial management. c. a decrease in competition among companies to recruit top talent. d. an increase in the size of the consumer market.
A
In the fiscal year 2015-2016, Nescarto, an African country, imported goods worth $18 million and exported goods worth $20 million. It also borrowed $40 million from other countries. In this scenario, Nescarto had a _____ during 2015-2016. a. balance of payments surplus b. balance of payments decumulation c. negative balance d. trade deficit
A
Larry is part of the Board of Governors that manages U.S. monetary policy. He has been elected by the President to serve a single 14-year term. In addition to setting the monetary policy, he is responsible for extending banking services to commercial banks. In this scenario, Larry is most likely part of the _____. a. Federal Reserve b. Department of Commerce c. Bureau of Economic Analysis d. U.S. Treasury
A
Lovine, a women-centric magazine, interviewed a victim of domestic violence. Although the magazine assured the victim that her name would not be mentioned in the article, it later published the article with the victim's real name. This scenario exemplifies a(n) _____. a. ethical lapse b. ethical dilemma c. false dilemma
A
Norman Phone Inc. is a leading cell phone manufacturer who recently launched Omn-1 model. Even before the sales of Omn-1 model could reach its peak, the company launched the next version, Omn-2. Omn-2 overtook the sales of the Omn-1 model and also of its competitors' products. This helped Norman Phone Inc. to maintain its position as a leading-edge cell phone manufacturer. This scenario demonstrates the importance of _____ as a key source of competitive advantage. a. speed-to-market b. power-to-cost c. event chain methodology d. elemental cost planning
A
In the context of foreign direct investment, which of the following statements is true of a partnership? a. It is the most costly form of direct investment. b. It is a formal, long-term agreement. c. It is the most basic level of international market development. d. It is also known as domestic franchising.
B
Rupert is an individual who believes in contributing to the community by using eco-friendly products. In the context of universal ethical standards, Rupert most likely possesses the core value of _____. a. trustworthiness b. fairness c. citizenship d. assertiveness
C
In the context of the workforce advantage in the business environment, finding and holding the best talent will likely become a crucial competitive issue in the next decade as the baby boom generation begins to retire. However, job market contraction may not be an issue, because: a. baby boomers include about 47 million people, while the generation that follows includes 77 million. b. baby boomers contribute to dysfunctional turnover, which is likely to reduce after they retire. c. reverse mentoring can ensure that young employees are properly trained by baby boomers. d. many baby boomers opt to postpone retirement in the face of inadequate financial resources.
D
Robert Lane, former CEO of Deere, a highly performing, highly ethical corporation, believes in the importance of senior management commitment to ethics, but he points out that the "tone at the top" must be reinforced by the actual behavior observed by suppliers, dealers, customers, and employees. At Deere, this is summed up in highly visible, frequently referenced shorthand known as: a. the when. b. the who. c. the where. d. the how.
D
The economic system of the East Asian nation of Xinzen calls for public ownership of all businesses. The government has complete control over the market, and individuals do not have individual rights and the freedom to make choices. In this scenario, the economic system followed by Xinzen is _____. a. socialism b. distributism c. capitalism d. communism
D
The government of Lenzerbia, a country in South Asia, monitors its inflation rate using an index that measures change over time in the prices that businesses pay to each other for goods and services. In this scenario, the Lenzerbian government most likely uses the _____ to evaluate inflation. a. prices received index b. consumer price index c. cost-of-living index d. producer price index
D
Trexlex, a sports retailer, employs Olympic hopefuls in its stores through the Olympic Job Opportunities Program. It offers athletes full-time pay and benefits for a flexible 20-hour workweek to accommodate their training schedules. In the context of a business's responsibility toward the community, this act by Trexlex exemplifies _____. a. corporate opportunism b. corporate relativism c. corporate etiquette d. corporate responsibility
D
Which of the following dimensions of the business environment covers the measurable characteristics of a population? a. The economic environment b. The technological environment c. The competitive environment d. The social environment
D
Which of the following statements is true of an ethics code? a. It states that when people violate ethical norms, companies must respond privately and not publicly to retain employee trust. b. It categorizes whistle-blowers as people who perform illegal or unethical behavior. c. The scope of a company's ethics code is local and not global. d. A written code is worthless if it does not reflect living principles.
D
