54) A checking account is __________. A. a place to “collect” money between inflows and outflows B. an account that acts like a reservoir C. useful because you can add money in any amount D. all of these

1. STR/581 Guide 3
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1) 3M, Hewlett-Packard, Lego, and other companies use the ________ to manage the innovation
process.
A. joint- venture system
B. skunk works
C. venture team
D. new product “team”
E. stage-gate system
2) ________ is the difference between the prospective customer’s evaluation of all the benefits and all
the costs of an offering and the perceived alternatives.
A. Failure avoidance rate
B. Competitors market share rate
C. Customer perceived value
D. Report rating
E. Perceived usefulness
3) A company can take several steps to improve the quality of its marketing intelligence. If the company
purchases competitive products for study, attends open houses and trade shows, and reads
competitors’ published reports and stockholder information, the company is using ________ to improve
the quality of its marketing intelligence.
A. intermediaries
B. sales force surrogates
C. external networks

2. D. advisory panels
E. customer feedback systems
4) Most established companies focus on ________ when it comes to innovation.
A. continuous innovation
B. incremental innovation
C. everyday innovation
D. demand innovation
E. competitive innovation
5) A(n) ________ is any good, service, or idea that is perceived by someone as new.
A. innovation
B. product
C. new idea
D. creative product
6) Total customer satisfaction is the general feeling of pleasure or disappointment that results from
comparing perceived performance to expectations. To achieve total customer satisfaction, organizations
need to_____________.
A. Spend more money
B. Develop marketing campaigns
C. Manage customer experiences
D. Lower expectations
E. Lower prices

3. 7) A ________ is a set of procedures and sources managers use to obtain everyday information about
developments in the marketing environment.
A. marketing information system
B. marketing research system
C. product management system
D. marketing intelligence system
E. vertical system
8) Marketers usually identify niches by ________.
A. conducting VALS tests
B. dividing a segment into subsegments
C. allowing consumers to gravitate toward product brands
D. examining the demographics section of The Handbook of Marketing
E. producing products that can be used in a variety of ways
9) In ________ marketing, the seller engages in the mass production, mass distribution, and mass
promotion of one product for all buyers.
A. mass
B. group
C. general
D. segmented
E. differentiated
10) Particularly when shopping for ego-sensitive products such as perfumes and expensive cars, many
consumers use price as an indicator of ________.
A. ability
B. capability

4. C. status
D. size
E. quality
11) A marketing manager needs to know the cost of the research project before approving it. During
which step in the marketing research process would such a consideration most likely take place?
A. Step 1—drafting the research objectives.
B. Step 2—develop the research plan.
C. Step 1—defining the problem.
D. Step 3—information collection
E. Step 1—creating decision alternatives.
12) Which of the following is generally considered to be the last step in the marketing research process?
A. Control the environment.
B. Make the decision.
C. Present the findings.
D. Draft the report
E. Analyze the information.
13) ________ is the systematic design, collection, analysis, and reporting of data and findings relevant to
a specific marketing situation facing the company.
A. Marketing research
B. Demographics
C. Marketing intelligence
D. Marketing management
E. MIS (marketing information system)

5. 14) Following the ________ approach to target market selection encompasses a strong knowledge of
the segment’s needs, a strong market presence, and operating economies through specializing in
production, distribution, and promotion.
A. product specialization
B. market specialization
C. single-segment concentration
D. full market coverage
E. selective specialization
15) The marketing communications mix consists of six major modes of communications. Which of the
following is NOT one of these modes?
A. Sales promotions
B. Packaging
C. Personal selling
D. Advertising
E. Direct marketing
16) The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting
target markets is ________.
A. the product may be supplanted by an entirely new technology
B. competitors can easily copy any new product introductions
C. no synergy exists
D. e-commerce becomes difficult for the company
E. logistics can become a nightmare
17) Marketing communications can contribute to brand equity by establishing the brand in memory and
to________ (in)a brand image.

6. A. communicate
B. craft
C. create interest
D. create demand
18) “Power prices” use price as a key strategic tool. These “power prices” have discovered the highly
________ effect of price on the bottom line.
A. leveraged
B. soothing
C. dramatic
D. abrasive
E. direct
19) Some intermediaries use the following: strategic planning, advanced information systems,
sophisticated marketing tools, measure performance on a return-on-investment basis, segment their
markets, improve their target marketing and positioning, and ________.
A. aggressively pursue take over strategies
B. aggressively pursue market expansion and diversification strategies
C. contend with dwindling customer bases
D. aggressively “squeeze” manufacturer margins
E. dominant the manufacturers they do business with
20) Major retailer types include the following EXCEPT ________.
A. catalog showroom
B. superstore
C. specialty store

7. D. discount store
E. the Internet
21) ________ communicates a company’s intended value positioning of its product or brand to the
market.
A. Place
B. Physical evidence
C. Packaging
D. Price
E. Promotion
22) Price has operated as the major determinant of buyer choice among poorer nations, among poorer
groups, and with ________ products.
A. over the Internet
B. commodity-type
C. identical
D. similar
23) New-to-the- world products are ________.
A. new products that supplement established product lines (package sizes, flavors, and so on)
B. existing products that are targeted to new markets or market segments
C. new products that create an entirely new market
D. new products that allow a company to enter an established market for the first time
E. new products that provide improved performance or greater perceived value and replace existing
products
24) _____ bargaining is negotiation that seeks to divide a “fixed pie.”
A. Reflective

8. B. Distributive
C. Affective
D. Conjunctive
E. Integrative
25) The two general approaches to bargaining are known as ________.
A. distributive and integrative
B. emotional and rational.
C. formal and informal.
D. legal and restrictive
E. affective and reflective
26) Leadership is best defined as _____.
A. implementing the vision and strategy provided by management
B. the ability to influence a group in goal achievement
C. coordinating and staffing the organization and handling day-to-day problems
D. not a relevant variable in modern organizations
E. keeping order and consistency in the midst of change
27) Which of the following statements best defines a work group?
A. A work group consists of 3 or more people who take on self-supervising responsibilities.
B. The performance of a work group is generally greater than the sum of its inputs from individual
members.
C. A work group consists of 3 or more people from across departmental or functional lines.
D. A work group is a group comprised of 10 or more people

9. E. A work group interacts primarily to share information, rather than to engage in work that requires
joint effort.
28) Which of the following statements about leadership is true?
A. managers are leaders.
B. leaders are managers.
C. leaders are hierarchically superior to followers.
D. Nonsanctioned leadership is as important as or more important than formal influence.
E. Formal rights enable managers to lead effectively.
29) Negotiation can be defined as a process in which two or more parties exchange goods or services
and attempt to agree upon _____.
A. a model of the negotiation process for resolving differences
B. the exchange rate for those goods and services
C. effective arbitrators for disputes
D. the monetary value of the exchanged items
E. acceptable bargaining strategies for obtaining the goods and services
30) If no one is aware of conflict, it is generally agreed that _____.
A. no conflict exists
B. employee-employer relations will be good
C. conflict is inevitable
D. conflict is psychologically driven as opposed to physically manifest
E. conflict is subversive
31) Training employees how to be better listeners falls under which of the following training categories?

10. A. problem-solving skills
B. ethical skills
C. interpersonal skills
D. cultural skills
E. technical skills
32) _____ can be used to increase the perception that employees are treated fairly.
A. Multiple raters
B. Documenting with a journal
C. Due process
D. Selective evaluation
E. Focusing on subjective evaluations
33) Which of the following is NOT a typical written test used in organizations?
A. personality
B. aptitude
C. integrity
D. intelligence
E. work sample
34) Examples of off-the-job training include all of the following except _____.
A. Internet courses
B. public seminars
C. apprenticeship programs

11. D. classroom lectures
E. videotapes
35) Which of the following has proven to be a particularly good predictor for jobs that require cognitive
complexity?
A. work sampling
B. aptitude tests
C. integrity evaluations
D. intelligence tests
E. behavioral assessment
36) Which of the following is not a primary force for change in organizations?
A. decreasing skill sets
B. social trends
C. economic shocks
D. technology
E. the nature of the workforce
37) The “realistic” personality from Holland’s typology of personality and congruent occupations would
be well suited for which of the following jobs?
A. mechanic
B. lawyer
C. accountant
D. painter

12. E. biologist
38) _____ developed a Vocational Preference Inventory questionnaire that contains 160 occupational
titles.
A. Hofstede
B. Herzberg
C. Holland
D. Maslow
E. Surber
39) Investors bragged about their investing expertise during the stock market rally between 1996 and
early 2000, then blamed analysts, brokers, and the Federal Reserve when the market imploded in 2000.
These investors were most probably guilty of what?
A. distinctiveness
B. selective perception
C. the halo effect
D. self-serving bias
E. fundamental attribution error
40) What term is used for the tendency of an individual to attribute his own successes to internal factors
while putting the blame for failures on external factors?
A. selective perception
B. stereotyping
C. consistency
D. self-serving bias
E. fundamental attribution error

13. 41) Operations stage toolkit for the Data Analysis and Solution Development phase include(s):
I. SPC tools II. Bottleneck analysis III. Computer simulation IV. Balanced scoreboard
A. II, III, and IV
B. I, II, III, and IV
C. I, II, III
D. II and III
E. I and II
42) The phenomenon of magnification of demand variability as we move from the customer to the
producer in the supply-chain is referred to as the:
A. price deflator
B. Just-in-time approach
C. bullwhip effect
D. Elasticity of demand
E. postponement effect
43) According to David Maister, the most complex projects requiring innovation and creativity are called
_________.
A. “brain surgery” projects
B. “grinding” projects
C. “gray hair” projects
D. “procedures” projects
44) Which of the following according to Goldratt is not a component of production cycle time?
A. queue time
B. maintenance time
C. wait time
D. process time

14. E. setup time
45) Which of the following would NOT be classified as a time-series technique?
A. regression model
B. trend projections
C. box Jenkins technique
D. exponential smoothing
E. simple moving average
46) Which of the following statements is true?
A. The Principle of Capital Market Efficiency says to consider the possible ways to minimize the value
lost to capital market imperfections, such as asymmetric taxes, asymmetric information, and transaction
costs.
B. The Behavioral Principle suggests to look for opportunities to create value by issuing securities that
are in short supply, perhaps resulting from changes in tax law.
C. The Signaling Principle says to consider any possible change in capital structure carefully, because
financing transactions and capital structure changes convey information to outsiders and can be
misunderstood.
D. all of these
47) “Hard” capital rationing refers to the rationing __________.
A. always imposed by competitors
B. always imposed by debt holders
C. imposed internally by the shareholders
D. imposed by external factors
48) Due to asymmetric information, the market fears that a firm issuing securities will do so when the
stock is _________.

15. A. caught up in a bear market
B. undervalued
C. being sold by insiders
D. overvalued
49) An investor's risky portfolio is made up of individual stocks. Which of the following statements about
this portfolio is true?
A. An investor cannot change the risk of this portfolio by her choice about personal leverage (lending or
borrowing).
B. Each stock in the portfolio has its own beta.
C. Each stock in the portfolio will have a beta greater than one.
D. Selling any stock in this portfolio will lower the beta of the portfolio.
50) __________ says to look for opportunities to invest in positive-NPV projects in foreign markets or to
develop derivatives or design arrangements that enable firms to cope better with the risks they face in
their foreign operations.
A. The Principle of Capital Market Efficiency
B. The Principle of Risk-Return Trade-off
C. The Principle of Valuable Ideas
D. The Principle of Diversification
51) __________ says to seek out investments that offer the greatest expected risk-adjusted real return.
A. The Principle of Self-Interested Behavior
B. The Principle of Incremental Benefits
C. The Principle of Valuable Ideas
D. The Signaling Principle

16. 52) __________ says to recognize the value of hidden options in a situation, such as the foreign
exchange options in some derivative instruments.
A. The Principle of Two-Sided Transactions
B. The Options Principle
C. The Time Value of Money Principle
D. The Principle of Comparative Advantage
53) Which of the following statements is true?
A. The Principle of Incremental Benefits says to consider the possible ways to minimize the value lost to
capital market imperfections, such as asymmetric taxes, asymmetric information, and transaction costs.
B. The Principle of Valuable Ideas suggests to look for opportunities to create value by issuing securities
that are in short supply, perhaps resulting from changes in tax law.
C. The Time Value of Money Principle advises to include any time-value-of-money tax benefits from
capital structure choices.
D. all of these
54) A checking account is __________.
A. a place to “collect” money between inflows and outflows
B. an account that acts like a reservoir
C. useful because you can add money in any amount
D. all of these
55) Under capital rationing, given the choice among several equally attractive investments, the best tool
to use is the __________.
A. Profitability Index method
B. Internal Rate of Return method
C. Net Present Value method

17. D. Payback method
56) __________ says to recognize the value of options contained in derivatives.
A. The Options Principle
B. The Capital Market Efficiency Principle
C. The Principle of Comparative Advantage
D. The Principle of Valuable Ideas
57) The managerial decision best addresses which of the following questions?
A. How fast should we grow?
B. What size of firm do we want?
C. How should we compensate our managers?
D. all of these
58) __________ says that if you transfer risk to another party, you must offer a return that fully
compensates for the amount of risk transferred.
A. The Principle of Incremental Benefits
B. The Risk-Return Trade-Off Principle
C. The Principle of Self-Interested
D. The Behavioral Principle
59) According to the Principle of Risk-Return Trade-Off, investors require a higher return to compensate
for __________.
A. less risk
B. diversification
C. greater risk

18. D. lack of diversification
60) Which of these investments would you expect to have the highest rate of return for the next 20
years?
A. intermediate-term U.S. government bonds
B. long-term corporate bonds
C. anybody’s guess
D. U.S. Treasury bills
61) Dimensions of risk include __________.
A. the impossibility of the same return
B. the certainty of a negative outcome
C. uncertainty about yesterday’s outcome
D. uncertainty about the future outcome
62) You work for ABC, Inc. in the finance department. You own shares in ABC, Inc. that are selling at $20
per share on the NYSE. You just found out they will have a new stock offering. You just found out they
will publicly announce a new stock offering. The costs from the offering will be 10% of the new offering.
The new offering will increase the number of outstanding share by 30%. There are currently 20,000,000
shares of ABC outstanding. Once the announcement is made public, what might be the expected impact
from transaction (or issuance) costs on each share you own?
A. You will lose 2% of the value of the shares you own.
B. You will lose 3% of the value of the share you own.
C. There will be no costs because markets are perfect when it comes to new stock offerings.
D. There will be no costs because there is no information asymmetry present.
63) Which of the following is (are) true?

19. A. The Principle of Risk-Return Trade-Off states that differences between financial assets are measured
primarily in terms of risk and return.
B. The Principle of Capital Market Efficiency states that people apply the Principles of Self-Interested
Behavior, Two-Sided Transactions, and Signaling to an environment characterized by similar financial
assets, low transaction costs, and intense competition leads to capital market efficiency.
C. The Principle of Valuable Ideas states that new ideas can provide value when first introduced, even
in an efficient capital market.
D. all of these answers are correct.
64) You do a study and find out that, on average, stock prices for firms decrease 3% for every 5%
decrease in inside ownership. You are watching the nightly business report and find out that Magic
Tape’s stock has announced that insiders have sold 10% of their holdings. You are concerned because
you own 1,000 shares of Magic Tape and it had closed the day before unchanged at $30 per share. If
markets are at least semi-strong form efficient, what would you expect?
A. You would lose $1,800.
B. You would lose $2.00 per share
C. You would expect Magic Tape to close at $28 the day of the announcement.
D. You would lose $4,000.
65) Incremental analysis would not be appropriate for
A. elimination of an unprofitable segment.
B. Analysis of manufacturing variances
C. a make or buy decision.
D. an allocation of limited resource decision.
66) Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of
$88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The
company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market
which would not affect its present sales. If the company has sufficient capacity to produce the additional
units, acceptance of the special order would affect net income as follows:
A. Income would increase by $70,000.

20. B. Income would increase by $20,000
C. Income would decrease by $4,000.
D. Income would increase by $4,000.
67) Which one of the following characteristics would likely be associated with a just-in-time inventory
method?
A. Minimal finished goods inventory on hand.
B. An understanding with customers that they may come to the showroom and select from inventory
on hand.
C. Ending inventory of work in process that would allow several production runs.
D. A backlog of inventory orders not yet shipped.
68) For what purpose is the theory of constraints used?
A. To identify and manage constraints that bottle-neck operations.
B. To reduce inventory levels
C. To reduce product defects.
D. To balance performance measurement.
69) Which decision will involve no incremental revenues?
A. Additional processing decision
B. Make or buy decision
C. Drop a product line
D. Accept a special order
70) Important factors considered by sales forecasters include all of the following except _____.
A. the desired level of sales

21. B. past patterns of sales
C. marketing research studies
D. competitors’ activities
71) _____ is an important factor considered by sales forecasters.
A. All of these answers are correct
B. Past patterns of sales
C. Estimates made by the sales force
D. General economic conditions
72) A _____ gives the expected sales under a given set of conditions.
A. sales forecast
B. sales prediction
C. sales budget
D. budget forecast
73) Which of the following does not appear as a separate section on the cash budget?
A. Financing
B. Cash receipts
C. Cash disbursements
D. Capital expenditures
74) A variable cost is a cost that
A. may or may not be incurred, depending on management's discretion.
B. varies per unit at every level of activity.

22. C. occurs at various times during the year.
D. varies in total in proportion to changes in the level of activity.
75) A company has total fixed costs of $120,000 and a contribution margin ratio of 20%. The total sales
necessary to break even are
A. $144,000.
B. $600,000.
C. $480,000.
D. $150,000.
76) A cost which remains constant per unit at various levels of activity is a
A. manufacturing cost.
B. fixed cost.
C. variable cost.
D. mixed cost.
77) How much sales are required to earn a target net income of $128,000 if total fixed costs are
$160,000 and the contribution margin ratio is 40%?
A. $320,000.
B. $648,000.
C. $400,000.
D. $720,000.
78) An absorption-costing income statement separates cost into the major categories of_____.
A. all of these answers are correct
B. product and period

23. C. manufacturing and nonmanufacturing
D. inventoriable and noninventoriable
79) The last step in activity-based costing is to
A. identify the cost driver that has a strong correlation to the activity cost pool.
B. compute the activity-based overhead rate per cost driver.
C. assign manufacturing overhead costs for each activity cost pool to products.
D. identify and classify the major activities involved in the manufacture of specific products.
80) The first step in activity-based costing is to
A. assign manufacturing overhead costs for each activity cost pool to products.
B. compute the activity-based overhead rate per cost driver.
C. identify and classify the major activities involved in the manufacture of specific products.
D. identify the cost driver that has a strong correlation to the activity cost pool.
81) There is no difference between variable-costing and absorption-costing income if there is no_____.
A. variable overhead cost
B. change in inventory level
C. beginning inventory
D. ending inventory
82) _____ are profitability ratios.
A. Price earnings and current ratio
B. Earnings per share and dividend yield
C. Gross profit rate and return on sales

24. D. Dividend payout and rate of return in invested capital
83) Which statements describe the principal reason(s) why investors and creditors use financial
statement analysis? 1. To assess the risks associated with expected returns 2. To establish
recommended dividend and interest payments 3. To evaluate top and middle level management 4. To
predict the amount of expected returns
A. 1, 2, and 3
B. 3 and 4
C. 1 and 2
D. 1 and 4
84) _____ are sections of the balance sheet.
A. Assets, liabilities, and owners’ equity
B. Expenses, revenues, and owners’ equity
C. Revenues, assets, and liabilities
D. Assets, liabilities, and expenses
85) A local retail shop has been operating as a sole proprietorship. The business is growing and now the
owner wants to incorporate. Which of the following is not a reason for this owner to incorporate?
A. the ease in transferring shares of the corporation’s stock
B. the prestige of operating as a corporation
C. ability to raise capital for expansion
D. desire to limit the owner’s personal liability
86) Although the U.S. has had a longstanding agreement with ___________, after the passage of NAFTA,
_________ became the United States' second largest trading partner.
A. Canada, Venezuela

25. B. Canada, Mexico
C. Mexico, Canada
D. Mexico, Venezuela
E. Great Britain, Paraguay
87) One study found that manufacturing labor costs about ___ an hour in China, compared to ____
dollars in the United States.
A. Less than $1; about 40
B. $2; about 25
C. About $2; about 15
D. Less than $1; about 15
E. Less than $1; about 25
88) Which of the following is not one of the Caux Round Table Principles for International Business?
A. Responsibility of Business Beyond Shareholders Toward Stakeholders.
B. Support for Multilateral Trade.
C. Promotion of Multiculturalism.
D. Respect for the Environment.
E. Avoidance of Illicit Operations.
89) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton
Friedman?
A. Corporate social audit
B. Moral minimum
C. Stakeholder interest
D. Corporate citizenship

26. E. Maximizing profits
90) Diversity training programs are generally intended to provide a vehicle for _____.
A. socializing otherwise unmanageable employees
B. focusing on individual differences
C. eliminating group learning
D. balancing work/life conflicts
E. increasing awareness and examining stereotypes
92) Which of the following is correct about litigating commercial disputes?
A. In all states, commercial disputes must be heard in a limited-jurisdiction court.
B. Commercial disputes, because of their specialized nature, are first heard at the appellate court level.
C. A few states have established specialized trial courts for commercial disputes.
D. Businesses generally dislike the concept of specialized trail courts for commercial disputes because
the large numbers of consumers who sue businesses in these courts have led the judges to become
generally biased against business.
E. Nearly all states have specialized trial courts that hear commercial disputes.
93) When an economist says that the demand for a product has increased, this means that:
A. the demand curve becomes steeper.
B. quantity demanded is greater at each possible price.
C. consumers respond to a lower price by buying more.
D. firms make less of the product available for sale.
94) If consumer incomes increase, the demand for product Y will _____________.
A. shift to the right if Y is a normal good

27. B. necessarily remain unchanged
C. shift to the right if Y is a complementary good
95) The force behind globalization in _____ was the amount of muscle, horsepower, wind power, or
steam power that a country could deploy.
A. None of these
B. Globalization 2.0
C. Globalization 3.0
D. Globalization 1.0
96) The Global, Web-Based Platform enables individuals to do which of the following?
A. all of these answers are correct
B. exchange knowledge
C. produce and sell goods and services
D. connect, compute, communicate, collaborate, and compete everywhere and all the time
E. access information, services, and entertainment
97) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by
information technologies.
A. business environment
B. nationalization
C. globalization
D. regionalization
98) Which research design listed below is most appropriate for establishing causality?
A. Individual depth interview
B. Behavioral observation

28. C. Focus group
D. Survey
E. Experiment
99) Which of the following statements is true concerning the applicability of attitudes in understanding
behavior?
A. Behavior is affected equally by those attitudes formed via social learning and those formed via
behavioral learning
B. A single, global measure of attitude is necessary to predict behavior
C. General attitudes are the best predictors of behavior
D. Cognitive attitudes influence behavior better than affective-based attitudes
100) The quartile deviation is:
A. Based on the middle 50 percent of the observations.
B. Appropriate only for symmetric distributions.
C. The square root of the variance.
D. In squared units of the original data.