CIMAPRO17-BA1-X1-ENG Online Practice Questions and Answers

A trade agreement that removes all import tariffs between member countries, sets up common external tariffs against non-members, but does not advance toward economic integration is called:

A. an economic union.

B. a customs union.

C. a free trade area.

D. a common market.

In recent years, consumer groups have become more vocal in calling for the boycott of producers whose suppliers do not comply with international regulations on workplace safety and child labour. A fashion company that outsources its production to low labour cost countries should include this phenomenon in which part of their PESTEL framework?

A. T

B. E

C. S

D. P

The following scatter diagram displays the total life expectancy in years on the X axis and GDP per capita (constant 2000 $) on the Y axis, in Country S for the past 40 years. Which of the following statements is true in respect of the graph?

A. A perfect positive linear relationship is shown in the diagram.

B. In most years, the samples shows a clear negative trend in the diagram.

C. There is no correlation between the level of GDP per capita and life expectancy.

D. In some years, the level of GDP per capita and life expectancy moved in opposite directions.

Company A is looking to protect itself from transaction exchange rate risk.

Company A does not require 100% of the value of transaction to be protected, and it would like the method it uses to have the following characteristics:

An agreed exchange rate for a specified period where both parties have a legal obligation.

A separation of the contract guaranteeing the price of the currency from the underlying transaction.

Which of the following would best provide the type of protection from exchange rate risk company A wants?

A. Future

B. Option

C. Forward contract

D. Floating exchange rate

A research business compiles the following data for Country D over 8 years:

Household expenditure, y (in millions of constant 20X6 dollars);

The number of fixed broadband internet subscribers, x (in thousands).

Based on this information the following regression model is developed:

y = 332668 + 45.8x ?0.003?

Which of the following statements is correct?

A. The model is based on historical data, so it is of little use in making forecasts.

B. 1 percent increase in the number of fixed broadband internet subscribers will lead to 0.3 percent increase in household final consumption expenditure.

C. A non-linear relationship is suggested by the model between household final consumption expenditure and the number of fixed broadband internet subscribers.

D. The model makes accurate forecasts on household final consumption expenditure in Country D, and therefore it should be widely applied to most countries and regions.

Futures are like forwards in that:

A. futures are a binding contract.

B. futures can be traded on future exchanges.

C. futures are standardized contracts for standardized amounts.

D. futures always cover the exact foreign currency exposure.

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The following cash flows are for a capital project where the required rate of return is 8 percent.

Calculate the NPV for the project. Give your answer to the nearest whole number.

A. 106,000

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Based on the past twenty months, an event decorating company develops a trend equation for forecasting sales revenue (y) where y = 4.38 + 1.32x.

If month 21 has a seasonal factor of times 1.07, then what is the forecast for the month, using a multiplicative model? Give your answer to two decimal places.

A. 6.77

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A clothes retailer wants to compute the Pearson's correlation coefficient between the number of shirts sold per day (x) and the number of jackets sold per day (y), across its eight stores (n=8).

If Σx = 256, Σy = 137, Σx² = 14278, Σy² = 4991 and Σxy = 8277, what is the Pearson's correlation coefficient? Give your answer to two decimal places.

A. 0.65

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A wireless phone manufacturer currently sells 2,000 units per quarter at a price of $400. The estimated price elasticity of demand is -2.5.

The manufacturer is considering an increase in the price to $440.

What will this raise (+) or reduce (-) total revenue by? Give your answer in whole numbers.

A. reduce - 139000