CIMA CIMAPRA17-BA1-1 Exam Practice Test Instant Access

Question 1

In the long run a firm may find its average cost of production rising because

Aof the operation of diminishing returns to a fixed factor

Bof the effect of diseconomies of scale

Cover time the price of purchased inputs rises

Din the long run all costs are variable costs

Answer : B

Question 2

Identify the source of funds most appropriate for a growing company to use which wishes to borrow funds long-term to pay for initial marketing research and promotion?

AA debenture

BA commercial bill

COrdinary shares

DOverdraft

Answer : C

Question 3

All of the following items would appear as a credit on the current account of a country's balance of payments accounts except which one?

AInterest payments on financial assets held overseas.

BExports of manufactured goods.

COutflows of capital.

DExpenditure by visiting foreign tourists.

Answer : C

Question 4

A manufacturing company is considering a new investment project.

Which TWO of the following would reduce the net present value of the investment to the business?

AA rise in the scrap value of the project at the end of its life.

BA reduction in the expected level of future sales.

CA rise in interest rates.

DA fall in the initial capital cost of the project

EAn expected fall in the future price of components used by the business

Answer : D, E

Question 5

Oxfam is a charity established to provide aid to the poor. Which ONE of the following statements about Oxfam is FALSE?

AIt is a private sector organization

BIt pursues social goals

CIt is a not-for-profit organization

DIt is responsible to its shareholders

Answer : D

Question 6

A business analyst has configured a trend regression for the sales of company X. The following table reports the ratios between the actual quarterly sales of company X and the calculated trend, for the period of four years.

What is the seasonal component in the fourth? Give your answer to the decimal places.

A1.365

B1.355

C1.375

D1.368

Answer : A

Question 7

In a recession, the central bank might adopt a policy of low interest rates. The businesses most likely to benefit from this are those which:

ASell their products mostly on credit

BHave low gearing ratios

CAre dependent on imported components and raw materials

DProduce services rather than manufactured goods

Answer : A

CIMA BA1 - Fundamentals of Business Economics CIMAPRA17-BA1-1 Exam Practice Test