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ETS MAJOR FIELD PRACTICE TEST
QUESTIONS AND ANSWERS (COMPLETE SOLUTIONS)
"A valid contract may be unenforceable for which reason(s)? a) Failure to satisfy the Statute of Frauds. b) Running of the Statute of Limitations c) Both (A) and (B)
d) A valid contract is always enforceable. - Correct Answer c) Both (A) and (B)"
"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 Answer 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 Answer 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 Answer c) Reducing the reserve requirement"
"Which one of the following is NOT a major dimension of global IT cultural, political and geo-economic challenges? a) Global business and IT strategies b) Global business and IT application portfolios c) Global IT platforms
d) Global software management - Correct Answer d) Global software management"
"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 Answer 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 Answer 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 Answer 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 Answer 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 Answer d) earned value analysis (EVA)"
a) purchasing-power equality b) commodity arbitrage c) currency hedging
d) interest-rate parity - Correct Answer 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. 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
Answer 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 Answer 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 Answer 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.
e) Sue will have more money than Neal as long as they retire at the same time - Correct Answer e) Sue
will have more money than Neal as long as they retire at the same time" "A sample of assistant professors on the business faculty at state supported institutions in Ohio revealed the mean income to be $32,000 for 9 months with a standard deviation of $3,000. Using Chebyshev's Theorem, what proportion of the faculty earns more than $26,000 but less than $38,000? a) At least 50% b) At least 25% c) At least 75%
d) At least 100% - Correct Answer c) At least 75%"
"When a domestic firm permits a foreign company to manufacture and sell its product in exchange for a fee or royalty, the process is termed a) importing b) exporting c) licensing
d) countertrading - Correct Answer c) licensing"
"In project management the term slack refers to the: a) amount of time to complete an activity without delaying the project b) amount of time an activity can be delayed without delaying the project c) amount of time needed to complete the entire project
d) amount of time required to complete the project's critical activities - Correct Answer b) amount of
time an activity can be delayed without delaying the project" "In the calculation of the arithmetic mean for grouped data, which value is used to represent all the values in a particular class?
appropriate fiscal policy in this phase of the business cycle would be to a) increase government spending b) increase income taxes c) decrease transfer payments
d) decrease the money supply - Correct Answer a) increase government spending"
"In ___________, provincial governments play a substantial role in trade and investment regulation a) China b) Norway c) Indonesia
d) Canada - Correct Answer d) Canada"
"Web 2.0 is best represented by which of the following phenomena? a) Social networking sites b) Word processing c) Internet browsers
d) Text messaging - Correct Answer a) Social networking sites"
"Officers and directors of a corporation owe to the corporation the subordination of their self-interest to the interest of the corporation and owe constant loyalty to the corporation. This duty is the: a) fiduciary duty b) business judgment duty c) duty of indemnification
d) duty of diligence - Correct Answer a) fiduciary duty"
"Which of the following is not part of the accounting process? a) Recording b) Identifying c) Financial decision making
d) Communicating - Correct Answer c) Financial decision making"
"In organizational decision making, managers are able to exercise the greatest degree of discretion in the a) enforcement of internal policies b) settlement of legal disputes c) restructuring of outstanding loans
d) compliance with federal regulations. - Correct Answer a) enforcement of internal policies"
"Money is the key motivator in a) Herzberg's motivation-hygiene theory b) Maslow's hierarchy of needs c) McGregor's Theory X and Theory Y
d) Taylor's scientific management - Correct Answer d) Taylor's scientific management"
"The incomes of a group of 50 loan applicants are obtained. Which level of measurement is income? a) Nominal b) Ordinal c) Interval d) Ratio
e) None of the above - Correct Answer d) Ratio"
"Saint Martin Hospital boasts one of the world's leading medical imaging programs. Its radiology department specializes in the early detection of particularly serious forms of stomach, intestinal, and colon cancer. The hospital plans to invest in a new system of digital medical imaging and image transmission technologies that will enable its radiologists to view and evaluate intestinal scan results from anywhere in the world. With this investment, the hospital is attempting to overcome which of the constraints of services marketing? a) Inventory b) Intangibility c) Inconsistency
d) Inseparability - Correct Answer d) Inseparability"
"The probability that a product will operate properly within an expected time frame is the dimension of quality known as a) durability b) reliability c) performance
d) serviceability - Correct Answer b) reliability"
"Which of the following would most likely occur as a result of the United States government's imposing tariffs on foreign steel imports? a) The price of steel produced in the United States would decrease.
d) Non-existent returns to Scale - Correct Answer a) Economies of Scale (Increasing returns to scale)"
"A firm that would like to know whether it has enough cash to meet its bills would be most likely to use which category of financial ratio? a) Liquidity b) Leverage c) Efficiency
d) Profitability - Correct Answer a) Liquidity"
"The economic entity assumption requires that the activities a) of different entities can be combined if all the entities are corporations b) must be reported to the Securities and Exchange Commission c) of a sole proprietorship cannot be distinguished from the personal economic events of its owners
d) of an entity be kept separate from the activities of its owner - Correct Answer d) of an entity be kept
separate from the activities of its owner" "Firms engage in international operations because they can benefit from: a) Cheap labor, cheap resources, and fair market opportunities b) Competitive labor prices, cheap resources, and enormous market opportunities c) Lax government regulation, low taxes, and few laws
d) Unsophisticated employees and customers, eager learners, and a few consumer goods - Correct
Answer b) Competitive labor prices, cheap resources, and enormous market opportunities"
"What is the unemployment rate? a) the percentage of the Labor Force that is unemployed b) the percentage of the Adult Population that is unemployed c) the percentage of the Adult Population that is not in the Labor Force
d) all of the above - Correct Answer a) the percentage of the Labor Force that is unemployed"
"A standard marketing strategy that is modified only minimally for use in each of the firm's foreign markets is a _____ marketing strategy.
a) lateral entry b) unipolar c) global
d) multidomestic - Correct Answer c) global"
"Markets for resources (factors of production) are different from goods markets because... a) There is always market power b) Resources are not consumed themselves, but are means to the production of some other good c) Resources are vague, undefined concepts
d) Resources are supplied by firms not households - Correct Answer b) Resources are not consumed
themselves, but are means to the production of some other good" "Standard deviation measures which type of risk? a) total b) nondiversifiable c) unsystematic d) systematic
e) economic - Correct Answer a) total"
"Information systems are either operations or management systems. Which one of the following would NOT be classified as an operations system? a) Transaction processing systems b) Process control systems c) Functional information systems
d) Executive support systems - Correct Answer d) Executive support systems"
"In monopolistic competition, there are: a) Many firms selling identical products b) Many firms selling similar, but not identical products c) A few firms selling similar, but not identical products
d) A few firms selling unique products with no close substitutes - Correct Answer b) Many firms selling
similar, but not identical products"
"Assume that $1 is equal to ¥102.32 and also equal to C$1.0958. Based on this, you could say that C$1 is equal to: C$1(¥102.32 / C$1.0958) = ¥93.37. The exchange rate of C$1 = ¥93.37 is referred to as the: A) Cross-rate B) Interest rate C) Forward rate D) Open exchange rate
E) Backward rate - Correct Answer A) Cross-rate"
"There are 10 rolls of film in a box and 3 are defective. Two rolls are to be selected without replacement. What is the probability of selecting a defective roll followed by another defective roll? a) 1/2, or 0. b) 1/4, or 0. c) 1/120, or about 0.
d) 1/15, or about 0.07 - Correct Answer d) 1/15, or about 0.07"
"Maxwell has been named to an upper-level management position at QVC. He will be working with transportation media, order processing, and development of marketing channels. Maxwell is involved in developing _____ strategies. a) product b) distribution c) promotional
d) marketing - Correct Answer b) distribution"
"Kershaw Bookstore had 500 units on hand at January 1, costing $18 each. Purchases and sales during the month of January were as follows: Date Purchases Sales Jan 14 375 @ $ Jan 17 250 @ $ Jan 25 250 @ $ Jan 29 250 @ $ Kershaw does not maintain perpetual inventory records. According to a physical count, 375 units were on hand at January 31. The cost of the inventory at January 31, under the LIFO method is: a) $1, b) $6, c) $7,
d) $8,000 - Correct Answer b) $6,750"
"The term "net working capital" refers to a) inventories, receivables, and current notes and investments b) assets divided by liabilities c) current assets less short-term liabilities
d) net assets left over after subtracting cost of goods sold - Correct Answer c) current assets less short-
term liabilities" "Marketers must constantly monitor their competitors' products, prices, distribution, and promotional efforts because the: a) competitors may be violating the truth-in-advertising laws b) actions of competitors may threaten the firm's monopoly position c) actions of competitors may create an oligopoly within an industry d) new product offerings by a competitor may require adjustments to one or more components of the
firm's marketing mix - Correct Answer d) new product offerings by a competitor may require
adjustments to one or more components of the firm's marketing mix" "The General Agreement on Tariffs and Trade (GATT) created the World Trade Organization (WTO). The WTO activities include: a) stimulating international commerce and resolving trade disputes. b) enforcement of the Foreign Corrupt Practices Act (FCPA). c) elimination of almost all trade barriers between Canada, Mexico, and the United States.
d) All the above are correct - Correct Answer a) stimulating international commerce and resolving
trade disputes." "A project has a net present value of zero. Which one of the following best describes this project? a) The project has a zero percent rate of return. b) The project requires no initial cash investment. c) The project has no cash flows.
a) control unit and primary memory b) control unit and arithmetic/logic unit c) arithmetic/logic unit and bus
d) arithmetic/logic unit only - Correct Answer b) control unit and arithmetic/logic unit"
"____ planning normally is performed by middle managers and typically has a one-year time frame a) Strategic planning b) Tactical planning c) Operational planning
d) Contingency planning - Correct Answer b) Tactical planning"
"A problem associated with equity theory is that: a) it focuses on providing incentives for the long run when most workers are mainly concerned with incentives that apply to their current situation b) managers have a hard time applying it to real-world situations because of its abstract nature c) worker motivation is based on perceptions of fairness, and the perceptions workers have about their contributions are not always accurate d) it is concerned with the nature of the job itself rather than with what motivates the workers who
perform the job - Correct Answer c) worker motivation is based on perceptions of fairness, and the
perceptions workers have about their contributions are not always accurate" "Priceless Treasures is an antique jewelry retailer. Priceless Treasures' owner, Sally Thornton, wishes to replace the printed catalog with an online catalog. Ms. Thornton decides to conduct a market research project to explore how Priceless Treasures' target customers would respond to the online catalog approach. From data collected by the retail jewelers' trade association, Ms. Thornton learns that sales of antique jewelry are rising and that the most common purchasers are older, upper-income couples. Though initially reluctant to purchase online, these customers are beginning to overcome their concerns. From United States Census Bureau data, she learns that this population segment is growing in number and will continue to do so throughout the next two decades. At this point what should Ms. Thornton do? a) Summarize the research findings and recommend implementing the online catalog as the firm's
market is clearl - Correct Answer b) Collect primary data to determine whether these trends and
preferences are reflected in Priceless Treasures' customer base."
"Zach, a high school junior, has just moved to a new town and cannot wait to get to school to meet new people. He likes sports and hopes he can try out for the soccer team. According to Maslow, Zach is working to fulfill his _____ needs: a) social b) esteem c) self-actualization
d) Safety - Correct Answer a) social"
"A student received an A on the first test of the semester. The student wants to calculate the probability of scoring an A on the second test. Historically, the instructor knows that the joint probability of scoring A's on the first two tests is 0.5. Also, historically, the probability that a student scores and "A" on the second test given that a student scored an A on the first test is 0.9. What is the probability that a student will score an A on the second test? a) 0. b) 0. c) 0.
d) 0.90 - Correct Answer c) 0.55"
"A project consists of 150 jobs. The expected completion time for each job is given in days. The project has three critical paths with two jobs in common, J and K. In order to finish the project one day early, the completion time should be reduced one day for a) each of the 150 jobs b) each of the jobs on the three critical paths c) either Job J or Job K
d) both Job J and Job K - Correct Answer c) either Job J or Job K"
"A company had sales of $920,000 and fixed costs were $160,000. What was the income from operations if the contribution margin ratio was 30 percent? a) $116, b) $276, c) $484,
d) $644,000 - Correct Answer a) $116,000"
"A system whereby products are delivered to warehouses on a continual basis, where they are sorted, repackaged and distributed to stores without sitting in inventory is known as a) postponement b) cross-docking c) continuous replenishment
d) direct-response delivery - Correct Answer b) cross-docking"
"In a period of rising prices, which inventory valuation method would generally yield both the lowest ending inventory value and the lowest net income figure? a) First in, first out (FIFO) b) Last in, first out (LIFO) c) Weighted average
d) Standard cost - Correct Answer b) Last in, first out (LIFO)"
"General Bikes is debating which marketing research options to employ. The traditional person-to- person methods have been effective; however, the new director of market research is campaigning for online-based research. What argument for this method might he/she use? a) Consumers are more relaxed at home in front of their computers, therefore it is more likely the responses will be truthful b) Online research has been standardized for each industry, making it easier to understand them c) A well-designed, Internet-based marketing research project can cost less and yield information faster than offline research d) Person-to-person methods most often incorporate researcher bias into the surveys and observations
- Correct Answer c) A well-designed, Internet-based marketing research project can cost less and yield information faster than offline research" "Which one of the following statements does NOT apply to the concept of an information system model? a) An information system transforms data into input b) An information system transforms information into data c) An information system transforms information into output
d) An information system transforms input into information - Correct Answer d) An information
system transforms input into information" "A manager who chooses the wrong goals for the organization and makes poor use of the organization's resources in pursuing these goals is said to have: a) Low effectiveness/low efficiency b) Low effectiveness/high efficiency c) High effectiveness/low efficiency d) High effectiveness/high efficiency
e) None of the above - Correct Answer a) Low effectiveness/low efficiency"
"What can we conclude if the coefficient of determination is 0.94? a) Strength of relationship is 0. b) Direction of relationship is positive c) 94% of total variation of one variable is explained by variation in the other variable
d) All of the above are correct - Correct Answer c) 94% of total variation of one variable is explained by
variation in the other variable" "As the size of the sample increases, what happens to the shape of the sampling means? a) Cannot be predicted in advance b) Approaches a normal distribution c) Positively skewed
d) Negatively skewed - Correct Answer b) Approaches a normal distribution"
"A differentiation strategy enables a business to address the five competitive forces by a) lessening competitive rivalry by distinguishing itself b) having brand-loyal customers become more sensitive to prices c) increasing economies of scale
d) serving a broader market segment - Correct Answer a) lessening competitive rivalry by
distinguishing itself" "In a large firm, the pool of applicants for the positions of sales manager and sales associate consists of three men and three women. If each candidate has an equal chance of being selected, what is the probability that both positions will be filled by men? a) 0. b) 0. c) 0.
d) 0.50 - Correct Answer a) 0.20"
"Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they produce.
