Multiple Choice Answers

A financial institution wishes to estimate the mean balances owed by its credit card customers. The population standard deviation is estimated to be $300. If a 98 percent confidence interval is used and an interval of ±$75 is desired, how many cardholders should be sampled?
A. 3382
B. 62
C. 87
D. 629

Thirty patients are selected from a filing cabinet containing 812 patient folders by choosing every 27th patient folder. Which sampling method is this?
A. Simple random sample
B. Systematic sample
C. Cluster sample
D. Stratified sample

Which of the following statements is true?
A. If A and B are independent events, the P(B) = P(A) P(B).
B. The sum of two mutually exclusive events is one.
C. If event (A) occurs, then its complement (A’) will also occur.
D. The probability of A and its complement (A’) will always sum to one.

Sampling error can be reduced by __________.
A. none of the these affect sampling error
B. utilizing simple random samples
C. increasing the sample size
D. decreasing the sample size

Companies using lean systems generally have:
A. suppliers who are low-cost producers.
B. suppliers that are willing to accept short-term contracts.
C. many suppliers to ensure that material shortages never occur.
D. suppliers that are located nearby to decrease delivery lead time.

Which of the following receives at least some protection under the U.S. Constitution? A. Obscene speech
B. Offensive speech
C. Neither obscene speech nor offensive speech
D. Both obscene speech and offensive speech

From its 32 regions, the Federal Aviation Administration selects 5 regions, and then randomly audits 20 departing commercial flights in each region for compliance with legal fuel and weight requirements. This is __________.
A. stratified random sampling
B. cluster sampling
C. simple random sampling
D. judgment sampling

William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income.
Assuming b1 is significant, if Income decreases by 1000 we would predict that Crime will __________.

A. increase by 428
B. increase by 50
C. decrease by 50
D. increase by 500

Which one of the following statements concerning production and staffing plans is best?
A. Aggregation can be performed along three dimensions: product families, labor, and time.
B. A staffing plan is the intermediate link between the business plan and the master production schedule.
C. Production plans are based primarily on information from the master production plan.
D. A master production schedule is a projected statement of income, costs, and profits.

While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:
A. the next worker that offers to work an extra 8 hours should receive at least $80.
B. you can send someone home 6 hours early and still pay them the $60 they would have earned while on the clock.
C. you would be willing pay up to $60 for someone to work another 6 hours.
D. you would lose $80 if one of your workers missed an entire 8 hour shift.

In an activity-on-node [AON] network, the nodes represent ____________, whereas the arcs represent ____________.
A. activities; time
B. activities; precedence relationships
C. events; activities
D. precedence relationships; time

Which one of the following statements about managerial inputs to production and staffing plans is best?
A. Finance provides labor and machine standards.
B. Human resources provide the training capacity and labor-market conditions.
C. Marketing provides new product or service developments.
D. Materials provide the current staffing level.

A set of programs that enable the hardware to process data is _____.
A. hardware
B. software
C. database
D. procedures
E. network

Which of the following are disadvantages of the buy option for acquiring IS applications?
A. software may not exactly meet the company’s needs
B. software may be impossible to modify
C. company will not have control over software improvements
D. all of the these are disadvantages
E. software may not integrate with existing systems

Various organizations that promote fair and responsible use of information systems often develop __________.
A. a code of ethics
B. a strategic plan
C. a mission statement
D. a goals outline
E. responsibility charters

Which of the following is not a source for external data?
A. commercial databases
B. corporate databases
C. sensors
D. government reports
E. satellites

Success in the _____ phase of the decision making process results in resolving the original problem, and failure leads to a return to previous phases.
A. implementation
B. choice
C. design
D. intelligence
E. consideration

Which of the following are not provided by digital dashboards?
A. Drill down
B. Transaction processing
C. Status access
D. Exception reporting
E. Key performance indicators

The management cockpit best exemplifies which type of system?
A. Decision support system  no
B. Digital dashboard
C. Functional area information system
D. Expert system
E. Group decision support system no

_____ is the efficient and effective execution of specific tasks.

A. Operational control
B. Strategic planning
C. Expertise
D. Management control
E. Wisdom

_____ is a process that helps organizations identify, select, organize, disseminate, transfer, and apply expertise that are part of the organization’s memory and typically reside inside the organization in an unstructured manner.
A. Discovery
B. Decision support
C. Online analytical processing
D. Knowledge management
E. Data mining

A company wants to use data from past promotional mailings to identify people who would likely respond favorably to future mailings. This company would most likely use _____.
A. structured query language
B. neural networks
C. expert systems
D. multidimensional data analysis
E. data mining

Which of the following best represents operating income?
A. Income after financing activities
B. Income from capital gains
C. Earnings before interest and taxes
D. Income from discontinued operations

Exchange rate risk:
A. arises from the fact that the spot exchange rate on a future date is a random variable.
B. has been phased out due to recent international legislation.
C. applies only to certain types of domestic businesses.
D. doesn’t affect trades made in US Dollars.
At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
A. 6%
B. 7%
C. 5%
D. 8%

Forward rates are quoted:
A. in direct form and at a premium or discount
B. daily
C. by the FDIC
D. in an indirect form
E. on financial statements

Tri State Pickle Company preferred stock pays a perpetual annual dividend of 2 1/2% of its par value. Par value of TSP preferred stock is $100 per share. If investors’ required rate of return on this stock is 15%, what is the value of per share?
A. $37.50
B. $16.67
C. $15.00
D. $6.00

Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?
A. Balance sheet
B. Quarterly statement
C. Income statement
D. Cash flow statement

Which of the following best represents the stream of income that is available to common stockholders?
A. Net profit after tax and after preferred dividend payments
B. Operating profit
C. Gross profit
D. Earnings before interest and taxes

According to the hedging principle, permanent assets should be financed with _____ liabilities.
A. permanent
B. fixed
C. current
D. spontaneous

What is the yield to maturity of a nine-year bond that pays a coupon rate of 20% per year, has a $1,000 par value, and is currently priced at $1,407? Round your answer to the nearest whole percent and assume annual coupon payments.
A. 5%
B. 11%
C. 12%
D. 14%

Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%, and the risk-free rate is 5%. According to CAPM, what is the required return on this stock?
A. 20.62%
B. 15.62%
C. 14.37%
D. 9.37%

At 8% compounded annually, how long will it take $750 to double?
A. 6.5 years
B. 12 years
C. 9 years
D. 48 months