Worksheets3.3 What is Business? MCQ Test 2
Total questions: 28
Worksheet time: 14mins
A corporate objective of survival is most likely to be set by: 1 mark
A long-established and profitable family business
A profitable multinational company
A high-profile start-up financed by substantial venture capital
An established business now experiencing growing losses
What is the market capitalisation of a company with a share price of £1.75 , dividends of 10p per share and 10 million shares in issue? 1 mark
£175 million
£10 million
£1 million
£17.5 million
The external environment concerns features of the business environment that are: 1 mark
Within the control of a business
Outside the control of a business
Opportunities for a business
Threats for a business
The following are all commonly used as corporate objectives EXCEPT which one? 1 mark
Return on investment
Inventory turnover
Market share
Market capitalisation
The FTSE-100 share index closed on 31 December 2015 at 6,242.3 having started 2015 at 6,566.1 . Which of these statements about share prices in 2015 are, therefore, true? 1 mark
The FTSE-100 index fell by 4.9% during 2015
The FTSE-100 index rose by 5.2% during 2015
All share prices fell during 2015
Most share prices rose during 2015
Next plc is a quoted company operating a large fashion retailing business importing over 95% of its merchandise. Which of the following factors is LEAST likely to effect Next plc’s share price? 1 mark
Strategies of its close competitors
The level of household disposable income in the UK
Exchange rates between the UK and Asia
The rapid growth of discount grocery supermarkets
A company informs the stock market that its results will be worse than the market currently expects. This is known as a: 1 mark
Dividend downgrade
Profits warning
Market capitalisation downgrade
Dividend announcement
The value of economic activity in an economy like the UK, US or Germany is officially measured in terms of: 1 mark
Total Household Income
National Income
Aggregate Economic Demand
Gross Domestic Product
The level of consumer demand in general is likely to be most directly affected by changes in: 1 mark
Interest rates and exchange rates
Exports and imports
Wages and income tax
Technological and social change
The term that describes the overall purpose of a business is: 1 mark
Mission
Core values
Strategy
Objectives
An example of a likely consequence for market demand arising from an ageing population would be: 1 mark
Lower demand for private healthcare
Increased demand for care home services
Lower demand for coach holidays
Increased demand for child care services
Not-for-profit organisations are also commonly referred to as: 1 mark
Partnerships
Public sector firms
Social enterprises
Public companies
Which of these is most likely to result in a higher share price for a quoted company? 1 mark
Profits significantly better than market expectations
Significant new competition enters the market
A new Operations Director is appointed to the Board
The dividend is increased from 15p to 16p per share
Which of these functional objectives would be consistent with a corporate objective to reduce costs? (1 mark)
Increase labour productivity by 20%
Increase average selling prices by 15%
Increase unit costs by 10%
Increase marketing budgets by 10%
The most important protection given by law to shareholders of a limited company is: (1 mark)
Enhanced employment rights
Immunity from being sued
Right to receive dividends
Limited liability
What name is given to where a company lists its shares on a public stock exchange for the first time? (1 mark)
Rights issue
Independent public offering
Flotation
New share listing
What "rights" do existing shareholders have in a rights issue? (1 mark)
The right to choose a new Board of Directors
Sell their shares at the highest price offered
Vote to increase the dividend
Subscribe for more shares - usually at a discount
Company A plc has 20 million shares in issue and a share price of £0.25 per share. If the share price rises by 8%, what will Company A’s market capitalisation be at the new share price? (1 mark)
£5.0 million
£5.4 million
£8.0 million
£8.4 million
Two likely benefits of a business successfully achieving a corporate objective of cost efficiency are: (1 mark)
Lower profit margin & higher return on investment
Lower cash flow & higher profits
Lower unit costs & higher cash flow
Lower contribution and higher breakeven output
An advantage of setting up as an incorporated rather than unincorporated business is that the business: (1 mark)
Will have unlimited liability
Will be able to obtain bank finance
Remains in existence after a change in ownership
Will be better at making decisions
The two most important indicators of market conditions are: (1 mark)
Economic growth & market demand
Inflation & unemployment
Disposable income & exchange rates
Share prices & interest rates
A business is most likely to be adversely affected by a significant rise in interest rates if it has: (1 mark)
High fixed costs and excess capacity
High borrowings at variable interest rates
High cash balances and low inventories
High borrowings at fixed interest rates
A fast-growing and increasingly large market is likely to create the market conditions for: (1 mark)
A price war amongst existing competitors
Existing competitors to leave the market
New market entrants
Lower demand and profits
A potential drawback of setting a corporate objective of sales maximisation is that: (1 mark)
The level of quality achieved is likely to be higher
Higher sales will enable an increased rate of inventory turnover
Economies of scale are less likely to be achieved
The sales achieved may not be profitable
Which one of these factors influencing share prices is outside of a company's control? (1 mark)
Rate of economic growth
Level of overheads
Dividend policy
Number of shares in issue
Which one of these statements about sole traders is FALSE? A sole trader... (1 mark)
Has unlimited liability
Can only have one employee
Still has to pay tax on profits earned
Is relatively cheap and easy to set up
All of these factors impact on the real incomes of consumers and households except which one? (1 mark)
Corporation tax rates
Consumer price inflation
Wage growth
Employment levels
As a result of the concept of limited liability, shareholders of an incorporated business: (1 mark)
Are limited in the dividends they can be paid
Can sue the business if unhappy with the Board’s decisions
Have limited control over business decisions
Are only liable for their investment
