Question 1

Which of the following is an ethical dilemma?

Options :

A : A company is considering giving poorly-paid staff a generous pay rise.

B : A company is deciding whether to issue debt or equity.

C : A company is deciding whether to make a substantial bonus payment to its directors by means of cash or shares.

D : A company must decide whether to settle a claim from an employee who appears to have fabricated a workplace injury. The company want to avoid the cost of defending the claim.

Answer: A

Question 2

Which of the following statements best explains why a corporate treasury department should be established as a cost centre rather than a profit centre?

Options :

A : The Treasury Department should not be encouraged to speculate.

B : The Treasurer should not have a great deal of responsibility.

C : There is no way for the Treasury Department to generate revenue.

D : The Treasurer has the ability to manipulate the Department-s reported profit.

Answer: A

Question 3

James owns a small company which sometimes suffers from credit risk.

Which of the following measures should he put in place to help reduce this risk?

Options :

A : Introduce credit checks for new customers.

B : Reduce the company bank loans.

C : Pay suppliers' invoices quicker.

D : Look for a loan with a lower interest rate.

Answer: A

Question 4

KLtdisan on-line travel agency specialising in budget package holidays to a small number of popular locations. The holidays that it sells are made up of a 'package' of flights, hotel accommodation and food. K Ltd's Finance Director is concerned that the company'sscope of operation is too narrow and wishesto diversify.

IdentifyTWOactions that K Ltdshould take immediately.

Options :

A : Set up a number of activity holidays; adventure, sports and trekking for example.

B : Bulk book cruise accommodation and create a special package deal for retired couples.

C :

Expand the number of locations it currently serves.

D : Re-image the locations it currently serves to make them more exotic and family friendly.

E : Review the customer base looking at feedback, repeat sales and single visit statistics.

F : Engage market researchers to look at future trends in holiday requirements.

Answer: A

Question 5

H Ltdis a company providing postal and courier services to small businesses. Customers pay a monthly or annual subscription fee to use the service, plusaverysmall fee for each item delivered.

A year ago, H employed a newsalesteam. Their remuneration is dependent on the number of new customers they sign up. Sales increased dramatically in the first six months, but nowdifficulties are emerging such as new customers dropping their subscription once the initial period has expired; subscriber direct debits being returned unpaid; subscribers going out of business and other similar issues.

Which of the following would be appropriate to help resolve these problems?

Options :

A : Alter the pricing structure in order to increase the price for sending each item but decrease the subscription element of the fee.

B : Ensure that a credit check is carried outbefore a subscriber is accepted.

C : Reduce the rate of commission payable to any sales person who fails to sign up at least an agreedminimum number of customers each month.

D : Alter the commission arrangements so that commission is payable only when the subscriber signs up for a second year.

E : Preparing a monthly report for sales persons detailing the performance of each new customer they have signed up over the previous year.

Answer: A,B,D

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