Sample Multiple Choice Questions (PDF)

 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) ________ policy involves the collection and spending of government revenues, while ________ policy focuses on controlling the size of the nation's money supply. 1) _______ A) Produc...

 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) ________ policy involves the collection and spending of government revenues, while ________ policy focuses on controlling the size of the nation's money supply. 1) _______ A) Productivity; inflation B) Taxation; monetary C) National debt; annual deficit D) Fiscal; monetary E) Monetary; fiscal 2) Which of the following best describes nominal GDP? A) Total value of all goods and services produced within a given period by a national economy, through domestic factors of production measured in current dollars, with all components valued at current prices 2) _______ B) Total value of all goods and services produced within a given period by a national economy through domestic and international factors of production C) Total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located D) Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system E) Total quantity of goods and services produced by an economic system 3) An enterprise in which two or more persons or companies temporarily join forces to undertake a project is called a(n) 3) _______ A) acquisition. B) spinoff. C) buyout. D) strategic alliance. E) merger. 4) A financial analyst has noticed a serious increase in inflation. What course of action might the financial analyst advise the government to take to reduce inflation? 4) _______ A) The government can lower taxes. B) Encourage the government to increase spending. C) The government can raise taxes. D) Encourage consumers to increase spending. E) Encourage the government to increase spending and lower taxes. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 5) If a Danish company builds a production facility in Canada, will the value of the goods produced be included in Canada's GNP? Explain. 5) _____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 6) What effect do higher interest rates have on consumer spending? A) Consumer spending is not impacted by changes in interest rates. 6) _______ B) Consumer spending decreases immediately, but then rises sharply after consumers get used to the new higher interest rates. C) Consumer spending decreases. D) Consumer spending increases as people try to quickly buy goods before rates go even higher. E) It is not possible to tell from the information given. 7) Marquand says: Information technology has had its biggest impact on business in communication and access to data. Businesses can collaborate with colleagues in different locations and with external partners with ease. Businesses also have access to a greater range of information at a greater speed than ever before. And with this constantly updated information, businesses can plan quicker responses to real-time market conditions and increase efficiency. Stevenson responds: Information is important, but what's more important is how that information is used. And there is no more direct way that information technology has helped businesses than the ability to sell directly to consumers. Online selling has opened entirely new markets that allow businesses to make greater profits in an efficient manner. Many businesses, such as Amazon, have used online selling to disrupt industries. Without having to spend money on bricks-and-mortar storefronts, they can make billions in profits selling products at low prices. In addition, Amazon (along with Alibaba and many others) have opened efficient platforms allowing small and big businesses to sell around the world. Which of the following, if true, would best support Marquand's position? 7) _______ A) Information technology has given consumers more choices than ever before. B) The majority of consumers make at least one online purchase per month. C) Information technology has greatly increased the choices available to consumers. D) Having information to help it plan gives a business the greatest competitive edge. E) Most businesses are motivated to take advantage of the latest information technology. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 8) "The purpose of any company is to make a good product, provide good jobs, and make a profit. Any social responsibilities that take away from that are not the role of business." Agree or disagree with this statement and support your position. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 9) The three general factors have been identified as important in causing individuals to behave in unethical ways are pressure, opportunity, and rationalization. 9) _______ 10) Triple bottom line reporting means measuring the finance, marketing, and production performance of a company. 10) ______ ESSAY. Write your answer in the space provided or on a separate sheet of paper. 11) What are ethics? What influences the development of ethics? How can ethical values vary significantly from one person to another? TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 12) When trying to determine whether a specific action is ethical or unethical, even minor changes in information about the context may create uncertainty about the correct answer. 12) ______ SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 13) List the four general approaches to social responsibility. 13) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 14) Sometimes foreign companies have many problems in complying with stringent and often changing regulations and bureaucratic obstacles known as 14) ______ A) cartels. B) local practices. C) business practice laws. D) local content laws. E) dumping. 15) The difference between absolute and comparative advantages is that absolute advantage is relative to ________, while comparative advantage is relative to ________. 15) ______ A) similar industries; dissimilar industries B) similar products; dissimilar products C) dissimilar products; similar products D) other nations; activity inside the country E) activity inside the country; other nations SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 16) In assessing a country's national competitive advantage, what is meant by "factor conditions"? 16) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 17) Fembooks sells books online. It has established an excellent reputation for finding out-of-print and hard-to-find books of interest to women. The CEO of Fembooks is considering truly going global with the business, since it is already established online. The vice-president further argues that more reasons exist for keeping a domestic focus for Fembooks despite the global reach of online channels. Which of the following statements, if true, would go against the vice-president's argument? 17) ______ A) Web censoring, which could impact feminist books, occurs in China, Saudi Arabia, Iran, and Malaysia. B) Some countries require Internet users to pay by the minute, which further necessitates a rapid ordering and payment procedure. C) Bandwidth variability can cause technical problems with online ordering. D) Local Internet webpage writers would need to ensure that all offensive colours, words, and images were removed to ensure cultural adaptation. E) The rate of access to computers is increasing on a global basis is estimated to increase by another 10 percent in the next three years. 18) Which of the following is correct with respect to exchange rates? A) Exchange rates typically fluctuate by very small amounts daily. 18) ______ B) The value of the Canadian dollar falls as the foreign demand for Canadian goods rises. C) The value of one country's currency relative to another varies with changes in GDP, but not as a response to market conditions. D) Fluctuation in exchange rates have little impact on the balance of trade. E) All of these are correct. 19) Which of the following companies may not find it profitable to go international? A) A financial investment firm 19) ______ B) A company that buys and sells fresh produce and fish C) A mining company D) A manufacturing firm specializing in bicycles E) A consulting company 20) After a very successful year when the firm exceeded targeted earnings levels by 10 percent, each employee received extra pay equal to 10 percent of what they earned for the year. This plan is called 20) ______ A) profit-sharing. B) pay-for-knowledge. C) pay-for-performance. D) gainsharing. E) merit salary. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 21) What is the purpose of a performance appraisal? 21) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 22) Joan is finding that her current benefit package does not meet her needs as it appears to be a "one size fits all" approach. What would Joan likely recommend to her employer to improve her satisfaction with the benefit package? 22) ______ A) Pay employees an additional amount to purchase their own external benefits plan B) Impose a wage and salary freeze to expand the benefits offered C) Lower commission rates for salespeople to expand the benefits offered D) Use a cafeteria benefit plan and let the employee select the benefits within a set monetary limit E) Offer only the benefits that are required by law 23) The ________ is federal legislation that designates four groups as employment disadvantaged: women, visible minorities, aboriginal people, and people with disabilities. 23) ______ A) Equal Pay Act of 1963 B) Employment Equity Act of 1986 C) Canadian Human Rights Act D) Canadian Employment Rights Act E) Fair Labour Standards Act ESSAY. Write your answer in the space provided or on a separate sheet of paper. 24) Discuss four methods that are commonly used to appraise employee performance. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 25) Why might a union try to organize workers? 25) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 26) In referring to cross-cultural leadership, culture refers to A) international differences. 26) ______ B) diversity-based differences within one culture. C) the difficulty of leadership working at all in some cultures. D) neither international differences nor diversity-based differences within one culture. E) international differences and diversity-based differences within one culture. 27) Bill Tarnofsky makes the following statement: "We must become more flexible if we are to meet our personnel needs and maximize efficiency. In the past, we simply hired as many full-time employees as we thought we needed. But this focus has caused us to lose many valuable employees. We should offer flextime and job-sharing options to help us keep and attract talented employees." Margaret Robin responds by saying: "Alternatives to traditional job design approaches can lead to significant cost savings. Next year we are expected to have 500 more employees than our current facility allows, but my analysis reveals that 600 of our employees could telecommute. Therefore, we can avoid costly actions such as moving our offices or building extensions if these workers became telecommuters. Job sharing can also reduce facility costs as well as payroll costs." If Robin's statements are all true, which of the following must also be true? 27) ______ A) If the number of telecommuters is more than 600, then the organization will be forced to either move its offices or build an extension. B) If the organization is forced to relocate its offices next year, then the number of telecommuters must be fewer than 600. C) The organization cannot build an extension and move its office at the same time. D) The potential cost saving from telecommuting is greater than the potential cost saving from job sharing. E) If the number of telecommuters is fewer than 600, then the organization will be forced to either move its offices or build an extension. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 28) Strategic leadership may be seen as an extension of transactional leadership. 28) ______ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 29) Which of Maslow's hierarchy of needs is being addressed by the employer that offers a pension to workers? 29) ______ A) Physiological B) Security C) Retirement D) Social E) Self actualization ESSAY. Write your answer in the space provided or on a separate sheet of paper. 30) Outline the basic characteristics of the classical theory of motivation. Can this theory be used today by business firms? Explain. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 31) Which of the following statements is correct with respect to the components of attitudes? A) Cognition is the most important element because without thinking, there is no action. 31) ______ B) The term "affect" refers to how a person feels about something. C) Research has shown that the most important influence on attitudes is cognition. D) Cognitive dissonance occurs when two employees have disagreement. E) Intentions are always translated into actual behaviour. 32) What is the difference between a Gantt chart and a PERT chart? A) There actually is no difference between Gantt charts and PERT charts; they are both used to schedule activities. 32) ______ B) PERT charts were formerly used more widely than Gantt charts, but the reverse is now true. C) Gantt charts focus more on efficiency, while PERT charts focus more on effectiveness. D) PERT charts show the critical path for meeting project goals, but Gantt charts do not. E) Gantt charts are used for planning service activities, while PERT charts are used for planning production activities. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 33) Scooters Corp. manufactures motorized scooters. Virtually all scooters are sold through direct appeals on the QVC shopping network. Overwhelmed by recent demand, top management is concerned about quality levels. What are three possible changes that the company can make to emphasize quality improvement? If a JIT production system is implemented, how might the firm's supply chain strategy be affected? MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 34) What is planning, organizing, and controlling the flow of materials from purchase through distribution of finished goods called? 34) ______ A) Production management B) Manufacturing management C) Materials management D) Operations management E) Process management 35) Just-in-time (JIT) production systems A) bring together all the needed materials and parts at the precise moment they are required for each production stage, not before. 35) ______ B) may lead to increased inventory obsolescence. C) increase the number of goods in process and save money by replacing stop-and-go production with smooth movement. D) keep inventory levels high so deliveries to customers can be made just in time. E) have been widely used since the Great Depression of the 1930s. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 36) The goal of supply chain management is to reduce the number of links in the channel. 36) ______ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 37) The typical layout in automobile, food-processing, and computer assembly plants is the ________ layout. A) fixed-position 37) ______ B) product C) customer D) process E) none of these 38) ________ is the formal recording and reporting of revenues in financial statements. A) Materiality 38) ______ B) Full disclosure C) Matching D) Revenue recognition E) Compliance 39) The inventory turnover ratio is calculated by A) dividing cost of goods sold by revenues. 39) ______ B) dividing revenues by average inventory. C) dividing average inventory by cost of goods sold. D) dividing revenues by cost of goods sold. E) dividing cost of goods sold by average inventory. 40) In terms of the evolving role of CPAs, which of the following is not true? A) There are now fewer restrictions imposed by geographical boundaries. 40) ______ B) Accountants need to know the nature of the client's business and its competitive environment. C) Accountants are increasingly being asked for advice on broad issues including business development and the evaluation of strategic opportunities. D) CPAs continue to rely on face-to-face interactions at occasional professional meetings. E) Accountants are increasingly serving as project managers. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 41) Marla is a private accountant who uses a six-step process to develop and analyze a company's financial reports. The first step in the process is to do a trial balance. 41) ______ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 42) Jerry wants to calculate gross profit for his business. Which formula should he use? A) Sales revenue minus operating expenses 42) ______ B) Sales revenue minus cost of goods sold C) Operating income minus income taxes D) Sales revenue minus income taxes E) Operating expenses minus income taxes 43) What is the term used to describe anything of economic value owned by a firm or individual? A) Benefit 43) ______ B) Asset C) Capital D) Owner's equity E) Credit TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 44) The marketing concept says that profitability is more important than any other criterion. 44) ______ SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 45) What is a benefit? 45) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 46) Assuming a company has been gathering ideas for new products, what is the next step in the development process? 46) ______ A) Screening B) Business analysis C) Test marketing D) Prototype development E) Concept testing 47) Which segmentation approach considers consumer characteristics such as their attitudes, interests, and opinions? 47) ______ A) Psychographic B) Behavioural C) Demographic D) Geographic E) Consumographic 48) Based on a product review in a magazine, Rob decided which product to buy. He is demonstrating the impact of 48) ______ A) psychological influences. B) social influences. C) cultural influences. D) past experience influences. E) personal influences. 49) A company that sells environmentally friendly, zero-impact products would likely use ________ segmentation to reach out to people that match their lifestyle approach and attitudes towards nature. 49) ______ A) demographic B) geographic C) intrinsic D) psychographic E) product-use variables TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 50) A silverware company would be smart to advertise in bridal magazines. 50) ______ 51) Like merchant wholesalers, agents or brokers take title to the goods, but they just don't take actual possession of the goods. 51) ______ SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 52) What is the difference between fixed costs and variable costs? 52) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 53) What term identifies a company's policy of offering all items in certain categories (e.g., men's suits) at a limited number of prices? 53) ______ A) Price lining B) Discounting C) Boundary pricing D) Price skimming E) Penetration pricing 54) A gas station offering a free car wash with a fill-up is an example of A) premiums. 54) ______ B) public relations. C) sales promotion. D) advertising. E) publicity. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 55) Television is a good medium to use if a company wants to educate viewers about complex products. 55) ______ ESSAY. Write your answer in the space provided or on a separate sheet of paper. 56) What are the five steps in the risk management process? MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 57) From a company's perspective, which of the following is the most conservative mix of long-term funding? A) 50% debt, 50% equity 57) ______ B) 100% debt C) 100% equity D) 25% debt, 75% equity E) 75% debt, 25% equity TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 58) Most commodities investors have no intention of ever taking possession of the commodities in which they trade. 58) ______ ESSAY. Write your answer in the space provided or on a separate sheet of paper. 59) Why are convertible bonds attractive to investors? MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 60) Sanjay Gupta is a 24-year-old graphic designer. He eventually wants to get married, raise a family, and buy a house. He knows that he must start putting money away so that his goals can someday become a reality. He has heard that investing is risky because you can lose money as well as make money. Therefore, Sanjay decides to play it safe and deposit money in a bank on a regular basis. Why might this not be his best strategy? 60) ______ A) Most savings accounts are insured by the CDIC. B) You can lose money with bank savings due to inflation and taxes. C) People usually benefit from risky investments. D) It pays to take chances with your money. E) Stock investments will always result in high returns. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 61) What is the difference between registered bonds and bearer bonds? 61) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 62) ________ is the view that a company's only social responsibility is to make as much money as possible for its shareholders. 62) ______ A) Globalization B) Free market capitalism C) Mixed economy capitalism D) Managerial capitalism E) None of these 63) Derrido is an American firm that has produced several successful animated TV series in the United States. It is considering contracting with one or more international companies to market its products overseas. An executive at Derrido suggests that a contractual relationship will provide the company with a fair amount of control over how the foreign partner markets Derrido's product. Which of the following, if true, would strengthen this case? 63) ______ A) Foreign companies often have considerable familiarity with American culture. B) Contractual relationships typically include limits and conditions on the foreign partner. C) Contractual relationships can be complicated by international law. D) Foreign companies usually expect to be given latitude with how they market U.S.-made products. E) Contractual relationships typically limit the responsibility of the originating firm. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 64) Job analysis is a detailed study of a job to determine the specific duties and the human qualities required to perform that job. 64) ______ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 65) Tim Raitt says: "We all agree that effective leadership is important, but that doesn't tell us how to make sure that the people we put in leadership positions are actually leaders. In my view, the most effective way to accomplish this goal is to identify the characteristics of effective leaders and make sure that the people in leadership positions have those qualities." Bonnie Haffior responds by saying: "You're on the right track, but effective leadership is less an issue of the characteristics that effective leaders have and more of an issue of what effective leaders do. If we can learn the most effective leadership behaviours, then we can identify future leaders and improve the performance of those currently in leadership positions." J. C. Kahn-Tinn chimes in: "Your theories would be wonderful if they worked, but in reality, they don't. People who are effective leaders in one context can be ineffective in another. Leadership approaches are not simply right or wrong. The most effective approach is to consider the context of the situation and then identify the leadership approach that is most appropriate to that situation." J. C. Kahn-Tinn's argument assumes which of the following? 65) ______ A) A person who has one of the qualities associated with leadership success is likely to possess other qualities associated with leadership success. B) The leadership approach required to be successful in each context is different from the approach required by any other context. C) The leadership approaches people most often take are also the ones that are appropriate in most circumstances. D) It is possible to identify the leadership approach that would be effective in each context before leadership action is required. E) No characteristics are strongly connected with effective leadership. 66) Stardust 'n' Clay is a manufacturer and mass marketer of personal care products and nutritional supplements. The company plans to launch a line of organic beauty products that are made entirely from mineral pigments and organic plant extracts. These products, though expensive to process, offer much higher margins than the company's current lines of beauty products. The market for organic beauty products is relatively untapped, with just a handful of players. Which of the following, if true, would weaken the argument for developing organic beauty products? 66) ______ A) Organic offerings have a shorter shelf-life compared to synthetic products. B) Few companies have obtained patents for their organic product innovations. C) Competitors in this segment are quick to copy any new product innovation and mimic product design. D) Financial analysis shows that it would take the company 1.5 years to recover its initial investment. E) Customers need to be educated about the relative benefits offered by organic products. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 67) What is a budget? 67) ____________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 68) Purple Moon markets adventure software to pre-teen girls. This is an example of A) product differentiation. 68) ______ B) relationship marketing. C) market segmentation. D) customer identification. E) mass customization. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 69) Explain the primary difference between a wholesaler and a sales agent. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 70) Which of the following represents the overall objective of financial managers? A) To manage the firm's cash flow 70) ______ B) To increase the value of the firm and thus to increase shareholder wealth C) To ensure that the company has enough funds on hand to purchase materials needed to produce goods and services D) To ensure that the company has enough money to pay for its debts E) To increase the supply of money for the economy ********************************************************************************************************** Answers: 1) D 2) A 3) D 4) C 5) The value of the goods won't be included in Canada's GNP, but will be included in its GDP because they are produced domestically, that is, in Canada. 6) C 7) D 8) Answers will vary. An example of the "disagree" arguments: - Consumers support businesses that implement social responsibility programs more often - Consumers support businesses that take special care of the environment - Suppliers who pollute attract a large amount of negative media attention 9) TRUE 10) FALSE 11) - Ethics are the individual standards or moral values regarding what is right and wrong or good and bad - Most common influences include family, which have the first chance to influence a child's ethics, and the work ethic (the belief and practice that hard work brings rewards), which is learned in the home - Peers who influence ethical behaviour later in life and experiences can increase or decrease certain types of ethical behaviour - Ethical values vary significantly based on the degrees of influence in a person's life 12) FALSE 13) Obstructionist, defensive, accommodative, and proactive 14) C 15) D 16) Factors conditions, also known as factors of production, include labour, capital, entrepreneurs, physical resources, and information resources. 17) E 18) A 19) B 20) A 21) The purpose of a performance appraisal is to determine the degree to which an employee is performing his/her job. 22) D 23) B 24) The simple ranking method requires a manager to rank-order from top to bottom or from best to worst each member of a work group or department. The forced distribution method involves grouping employees into predefined frequencies of performance ratings (e.g., good, very good, etc.). The graphic rating scale requires the manager to read various statement about employee job performance (e.g., the employee takes initiative) and then agree or disagree with the statement. The critical incident method asks raters to recall examples of especially good or poor employee performance, and then describe what the employee did (or did not do) that led to success or failure. 25) There are several reasons a union might try to organize workers: when a firm is trying to move into a new geographical area, or when some workers in a firm are members and the union wants to represent other workers, or when it is attempting to outdo a rival union, or when it wants to increase the number of workers who belong to the union. For example, the United Auto Workers saw its membership drop sharply in recent years due to layoffs at companies like General Motors. So, the UAW launched a campaign to unionize workers of foreign auto manufacturers like Toyota, Honda, Nissan, and Hyundai. 26) E 27) B 28) FALSE 29) B 30) - Workers motivated solely by money - Meant that managers had to design the work process in such a way as to recognize this motivation for money - Important to realize that factors other than money often contribute to job satisfaction Examples of the other views are: - Results of Hawthorne Studies - Expectancy theory - Theory X and Y - Equity theory - Maslow's Hierarchy of Needs - Goal setting theory - Two-factor theory 31) B 32) D 33) The activities of the company must be coordinated with a network of other firms. The company will need to consider these firms as members of a coordinated supply system. A JIT production system will be challenging since timing will be of the utmost importance. The company will need to communicate quickly and effectively with its partners and will need the latest technologies to implement the more challenging JIT system. Supply chain strategy is based on the idea that members of the chain will gain competitive advantage by working as a coordinated unit. Although each company looks out for its own interests, it works closely with suppliers and customers throughout the chain. 34) C 35) A 36) FALSE 37) B 38) D 39) E 40) D 41) FALSE 42) B 43) B 44) FALSE 45) A benefit is what the consumer gets from owning the product. Product features are important in providing benefits. 46) A 47) A 48) B 49) D 50) TRUE 51) FALSE 52) Fixed costs remain constant with varying levels of production or sales. Variable costs change with the quantity of a product produced or sold. Examples of fixed costs include rent, insurance, and utilities, whereas examples of variable costs include those for raw materials, sales commissions, and shipping. 53) A 54) C 55) FALSE 56) - Step 1: Identify risks and potential losses - Step 2: Measure the frequency and severity of losses and their impact - Step 3: Evaluate alternatives and choose the techniques that will best handle the losses - Step 4: Implement the risk-management program - Step 5: Monitor results 57) C 58) TRUE 59) They are attractive because they give the owner the option to convert the bond to common shares at a certain price (known as the strike price). If the price of the company's stock is above the strike price, the bondholder makes a profit (in addition to the interest the bondholder collected along the way). 60) B 61) The issuing company mails interest cheques to owners of registered bonds, but a bearer bond owner must clip coupons and send them to the issuer to receive interest payments. 62) D 63) B 64) TRUE 65) D 66) C 67) A budget is a detailed statement of estimated receipts and expenditures for a period of time in the future. 68) C 69) The primary difference is the role that each intermediary plays within the distribution mix. The wholesaler's role is generally to distribute the product to any retailers that will buy it and resell it. Wholesalers are only indirectly concerned with who the consumers of the product actually are. Sales agents, on the other hand, seek out the consumers for the product directly and negotiate the sales of the product as part of their commission. Thus, they have a more active role in finding and securing consumers for the product. Wholesale distribution and distribution by agents or brokers are two of the four popular distribution channels, along with direct distribution and retail distribution. 70) B