Q&A Hero

Q: Deciding who will be assigned to which job is a part of the leading function of management.

Q: Defining goals is a key part of the organizing function of management.

Q: Providing motivation is part of the controlling function of management.

Q: Determining who reports to whom is part of the controlling function of management.

Q: Application of Skills (Scenario)Harris, a budding stand-up comedian, spent months hanging out at Laugh Town, a local club, meeting other stand-ups, doing a lot of listening and finding out how they learned their trade. It got to the point where several of the star acts were trying out their new material on Harris. If Harris laughed, the material must be good, they said. Finally Harris got to the point where he wanted to try out his own act. Bobby G, a successful comic, agreed to listen to Harris. Bobby laughed a few times, but as he performed his material Harris couldn't help but wonder about the odd, pained expression on Bobby's face. When it was over, Bobby told him, "Very funny, Harris. Keep working on it." It was at that point that Harris decided he would become an agent for other comedians. Somehow, he knew that that was what he was truly suited for.Recognizing that the pained expression on Bobby G's face had more meaning than Bobby's encouraging words is an example of Harris using which skill?A) conceptual skillB) political skillC) interpersonal skillD) technical skill

Q: Michelle is the general manager of a power plant. This morning, she will meet with city officials to discuss environmental issues. After the meeting, she will confer with the plant's section managers to address the concerns of the city representatives. This afternoon, Michelle will meet with a team leader to go over a complaint filed by an employee. After the complaint meeting, Michelle plans to spend time in the library and on the Internet researching new technologies that can be used to improve the performance of her plant. Michelle's evaluation of new technologies that can be used in the production processes of her plant is an example of which type of management skill? A) conceptual B) communication C) political D) interpersonal

Q: Michelle is the general manager of a power plant. This morning, she will meet with city officials to discuss environmental issues. After the meeting, she will confer with the plant's section managers to address the concerns of the city representatives. This afternoon, Michelle will meet with a team leader to go over a complaint filed by an employee. After the complaint meeting, Michelle plans to spend time in the library and on the Internet researching new technologies that can be used to improve the performance of her plant. Which type of management skill does Michelle use most during the day? A) conceptual B) informational C) interpersonal D) political

Q: Michelle is the general manager of a power plant. This morning, she will meet with city officials to discuss environmental issues. After the meeting, she will confer with the plant's section managers to address the concerns of the city representatives. This afternoon, Michelle will meet with a team leader to go over a complaint filed by an employee. After the complaint meeting, Michelle plans to spend time in the library and on the Internet researching new technologies that can be used to improve the performance of her plant. When Michelle spends time searching for new technologies for her plant, she is performing which management role? A) leader B) entrepreneur C) spokesperson D) disturbance handler

Q: Michelle is the general manager of a power plant. This morning, she will meet with city officials to discuss environmental issues. After the meeting, she will confer with the plant's section managers to address the concerns of the city representatives. This afternoon, Michelle will meet with a team leader to go over a complaint filed by an employee. After the complaint meeting, Michelle plans to spend time in the library and on the Internet researching new technologies that can be used to improve the performance of her plant. When Michelle meets with the section managers to brief them on the concerns of the city officials, which management role is she performing? A) disseminator B) liaison C) disturbance handler D) negotiator

Q: Michelle is the general manager of a power plant. This morning, she will meet with city officials to discuss environmental issues. After the meeting, she will confer with the plant's section managers to address the concerns of the city representatives. This afternoon, Michelle will meet with a team leader to go over a complaint filed by an employee. After the complaint meeting, Michelle plans to spend time in the library and on the Internet researching new technologies that can be used to improve the performance of her plant. When Michelle addresses a complaint filed by an employee, she is performing which management role? A) resource allocator B) disturbance handler C) liaison D) figurehead

Q: The General Manager (Scenario)Michelle is the general manager of a power plant. This morning, she will meet with city officials to discuss environmental issues. After the meeting, she will confer with the plant's section managers to address the concerns of the city representatives. This afternoon, Michelle will meet with a team leader to go over a complaint filed by an employee. After the complaint meeting, Michelle plans to spend time in the library and on the Internet researching new technologies that can be used to improve the performance of her plant.When Michelle learns from city officials about how her plant's operations may be affecting the environment, she is performing which management role?A) leaderB) resource allocatorC) entrepreneurD) liaison

Q: Don Sakaguchi, manager at Control Systems, Inc., sighs as he sips his coffee at 5 A.M. and reads his agenda for the day. Don's first duty is to preside over a retirement party for a beloved employee and say a few words on her behalf. Next, he will give a tour to a news reporter who is writing a story on the new plant expansion. Don then has a meeting with the unit manager, Phil Johnson, to discuss Phil's recent performance drop (a task Don always hates). Finally, in the late afternoon, Don will be reviewing the recent equipment malfunction and deciding whether to deploy extra people to get the equipment running as soon as possible. What a day! When Don reviews the equipment malfunction, what management role will he play in deciding whether to bring in extra people? A) monitor B) disseminator C) resource allocator D) disturbance handler

Q: Don Sakaguchi, manager at Control Systems, Inc., sighs as he sips his coffee at 5 A.M. and reads his agenda for the day. Don's first duty is to preside over a retirement party for a beloved employee and say a few words on her behalf. Next, he will give a tour to a news reporter who is writing a story on the new plant expansion. Don then has a meeting with the unit manager, Phil Johnson, to discuss Phil's recent performance drop (a task Don always hates). Finally, in the late afternoon, Don will be reviewing the recent equipment malfunction and deciding whether to deploy extra people to get the equipment running as soon as possible. What a day! What kind of a manager is Don likely to be? A) first-line manager B) CEO of a major corporation C) low-level middle manager D) plant manager

Q: Don Sakaguchi, manager at Control Systems, Inc., sighs as he sips his coffee at 5 A.M. and reads his agenda for the day. Don's first duty is to preside over a retirement party for a beloved employee and say a few words on her behalf. Next, he will give a tour to a news reporter who is writing a story on the new plant expansion. Don then has a meeting with the unit manager, Phil Johnson, to discuss Phil's recent performance drop (a task Don always hates). Finally, in the late afternoon, Don will be reviewing the recent equipment malfunction and deciding whether to deploy extra people to get the equipment running as soon as possible. What a day! When Don meets with Phil to discuss Phil's output decline, in which management role will Don be operating? A) leader B) figurehead C) disseminator D) spokesperson

Q: Don Sakaguchi, manager at Control Systems, Inc., sighs as he sips his coffee at 5 A.M. and reads his agenda for the day. Don's first duty is to preside over a retirement party for a beloved employee and say a few words on her behalf. Next, he will give a tour to a news reporter who is writing a story on the new plant expansion. Don then has a meeting with the unit manager, Phil Johnson, to discuss Phil's recent performance drop (a task Don always hates). Finally, in the late afternoon, Don will be reviewing the recent equipment malfunction and deciding whether to deploy extra people to get the equipment running as soon as possible. What a day! When Don attends the retirement party, he will be operating in which of the management roles? A) leader B) liaison C) monitor D) figurehead

Q: The Busy Day (Scenario)Don Sakaguchi, manager at Control Systems, Inc., sighs as he sips his coffee at 5 A.M. and reads his agenda for the day. Don's first duty is to preside over a retirement party for a beloved employee and say a few words on her behalf. Next, he will give a tour to a news reporter who is writing a story on the new plant expansion. Don then has a meeting with the unit manager, Phil Johnson, to discuss Phil's recent performance drop (a task Don always hates). Finally, in the late afternoon, Don will be reviewing the recent equipment malfunction and deciding whether to deploy extra people to get the equipment running as soon as possible. What a day!What role will Don be performing when he gives the plant tour to the newspaper reporter?A) monitorB) entrepreneurC) spokespersonD) resource allocator

Q: As a production supervisor, Joe determines the number of output units his department will produce each week. On Monday, he informs his team that the schedule is going to be difficult this week due to the increased number of output units. He goes on to tell them that he is confident that they can fulfill the schedule because they are tough, talented, and "when the going gets tough, they are the ones who get going." Each day during the week, Joe checks the amount of output that the employees have completed and the number of units that have been rejected. When Joe tells the employees that he is sure they can fulfill the schedule because they are the ones "who get going when the going gets tough," he is performing which management process? A) controlling B) leading C) planning D) organizing

Q: Joe, the Manager (Scenario)As a production supervisor, Joe determines the number of output units his department will produce each week. On Monday, he informs his team that the schedule is going to be difficult this week due to the increased number of output units. He goes on to tell them that he is confident that they can fulfill the schedule because they are tough, talented, and "when the going gets tough, they are the ones who get going." Each day during the week, Joe checks the amount of output that the employees have completed and the number of units that have been rejected.When Joe checks the amount of output units that the team has completed and the number of units that have been rejected, he is performing which management process?A) controllingB) leadingC) planningD) organizing

Q: Which set of skills would you expect the President of the United States to be least in need of?A) interpersonalB) politicalC) conceptualD) technical

Q: Which level of management would be more concerned with designing the overall structure of an organization?A) Middle managementB) Supervisory managementC) Top managementD) First line management

Q: Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.

Q: "Phantom bills" are bills of material for subassemblies that do not exist in reality.

Q: Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of dependent inventory models.

Q: What is MRP? Identify four benefits from its use.

Q: Describe the role of record accuracy in Wheeled Coach's successful use of MRP.

Q: ________ is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements.

Q: Wheeled Coach uses ________ as the catalyst for low inventory, high quality, tight schedules, and accurate records.

Q: Which of the following is NOT a key benefit of MRP? A) increased quality B) better response to customer orders C) faster response to market changes D) improved utilization of facilities and labor E) reduced inventory levels

Q: Dependent demand and independent demand items differ in that: A) for any product, all components are dependent-demand items. B) the need for independent-demand items is forecast. C) the need for dependent-demand items is calculated. D) All of the above are true. E) None of the above is true.

Q: Demand for a given item is said to be dependent if: A) it originates from the external customer. B) there is a deep bill of material. C) the finished products are mostly services (rather than goods). D) there is a clearly identifiable parent. E) the item has several children.

Q: Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation? A) The material plan must meet both schedule requirements and facility capabilities. B) The plan must be executed as designed. C) Inventory investment must be minimized. D) Excellent record integrity must be maintained. E) The process must adhere to stringent quality control standards.

Q: Earnings on variable life and universal life insurance policies are ___________. A. never taxed B. taxed only at the capital gains tax rate C. not taxed until the money is withdrawn D. not taxed at the federal level but are taxed at the state level

Q: The amount of risk an individual should take depends on his or her: I. Return requirements II. Risk tolerance III. Time horizon A. I only B. I and II only C. II and III only D. I, II, and III

Q: Of the following, the most flexible type of life insurance policy from the policyholder's perspective is probably a ___________ policy. A. term life B. whole life C. variable life D. universal life

Q: Under a "passive core" portfolio management strategy, a manager would ___________. A. index the entire portfolio B. index part of the portfolio and actively manage the rest C. delegate the management of core segments of the portfolio to other managers D. actively manage the entire portfolio

Q: Which one of the following is a life insurance policy that will provide a fixed death benefit and allows the policyholder to choose where to invest the policy's cash value? A. Term life B. Whole life C. Variable life D. Industrial life

Q: Endowment funds are held by __________. A. financial intermediaries B. individuals C. profit-oriented firms D. nonprofit institutions

Q: An active asset allocation strategy involves _________. A. investing in the stock of companies that are price takers B. maintaining approximately the same proportions of a portfolio in each asset class over time C. varying the proportions of a portfolio in each asset class in response to changing market conditions D. selecting individual securities in different sectors that are believed to be undervalued

Q: A passive asset allocation strategy involves _________. A. investing in the stock of companies that are price takers B. maintaining approximately the same proportions of a portfolio in each asset class over time C. varying the proportions of a portfolio in each asset class in response to changing market conditions D. selecting individual securities in different sectors that are believed to be undervalued

Q: Of the following, the investment time horizon is typically the shortest for __________. A. banks B. endowment funds C. life insurance companies D. pension funds

Q: _______ is a life insurance policy that will provide a death benefit only and has no savings plan. A. Term life B. Whole life C. Variable life D. Universal life

Q: Empirical evidence confirms that investors become __________ as they approach retirement. A. greedier B. less interested in investments C. more risk averse D. more risk tolerant

Q: _______ is a life insurance policy that provides a death benefit and a fixed-rate tax-deferred savings plan. A. Term life B. Whole life C. Variable life D. Universal life

Q: Many defined benefit pension plans have a target rate of return on investment that is equal to the ____________. A. firm's return on equity B. plan's assumed actuarial rate of return C. economic inflation rate because wages often increase with inflation D. estimated stock market return

Q: A pension fund will owe $15 million to retirees in 20 years. An actuary assumes a 6% rate of return on the funds invested in the pension plan, but the fund actually earns 8%. The pension plan receives annual contributions from the company sponsor. If the 8% rate of return is expected to continue, by how much can the company reduce its pension payments per year? A. $65,437 B. $79,985 C. $89,462 D. $95,320

Q: The possibility that you are too conservative and your money doesn't grow fast enough to keep pace with inflation is called ________. A. purchasing power risk B. liquidity risk C. timing risk D. market risk

Q: The risk that a downturn in the market may substantially reduce your investment principal is called _______. A. purchasing power risk B. interest rate risk C. market risk D. liquidity risk

Q: A pension fund will owe $10 million to retirees in 6 years. An actuary assumes an 8% rate of return on the funds invested in the pension plan. If the pension plan receives annual contributions from the company sponsor, how much must the company pay each year to fully fund the pension liability? A. $1,212,587 B. $1,363,154 C. $1,533,333 D. $1,666,667

Q: Life insurance companies try to hedge the risks inherent in whole-life insurance policies by investing in __________. A. long-term bonds B. money market mutual funds C. savings accounts D. short-term commercial paper

Q: An employee has an average wage of $60,000 and has worked for the firm for 25 years. The defined benefit pension plan pays retirees 2.5% of the average wage times the years of service. The employee can expect to receive _______ per year upon retirement. A. $18,000 B. $37,500 C. $45,325 D. $55,250

Q: If a defined benefit pension fund's actual rate of return is _____ than the actuarial assumed rate, then the ___________. A. greater; employees will benefit B. greater; firm's shareholders will benefit C. lower; employees will benefit D. lower; firm's shareholders will benefit

Q: Personal trusts are typically allowed to engage in which of the following investment activities? I. Buying and selling futures contracts. II. Short-selling securities. III. Purchasing and writing options. IV. Buying stock on margin. A. I only B. II and III only C. II and IV only D. None of the given activities are allowed.

Q: If an individual confers legal title to property to another person or institution to manage the property on their behalf, the individual has created ___________. A. a personal trust B. a charitable trust C. an endowment fund D. a mutual fund

Q: Which of the following typically strives to earn a return on their investments that exceeds the actuarially determined rate of return? A. Banks B. Thrifts C. Mutual funds D. Pension funds

Q: An individual is on the game show Squeal or No Squeal, and she has a choice between receiving a certain gain of $100,000 and receiving a 50% chance of winning $200,000 or zero. If she takes the gamble instead of the certain $100,000, she is acting ____________________. A. like a person who is risk-neutral B. like a person who is risk averse C. like a person who is a risk lover D. irrationally

Q: The price of your investment increases 20% one month after you buy it. You do not believe that the stock's prospects have changed. Which one of the following actions would indicate the lowest amount of risk aversion? A. You hang on to the stock, anticipating that it will go higher. B. You buy more stock, anticipating that it will go higher. C. You sell all of your stock holdings immediately. D. You sell half of your stock holdings and invest the proceeds in other areas of your portfolio.

Q: The term hedge refers to an investment that is used ________________. A. primarily for tax-loss selling purposes B. to mitigate specific financial risks C. to conceal one's true investment strategy from other market participants D. primarily to defer capital losses

Q: The two most important factors in describing an individual's or organization's investment objectives are ________________. A. income level and age B. income level and risk tolerance C. age and risk tolerance D. return requirement and risk tolerance

Q: As the typical investor ages, the composition of his wealth usually switches from primarily _______ to primarily _______. A. human capital; financial capital B. financial capital; human capital C. intellectual capital; physical capital D. investable capital; noninvestable capital

Q: Which of the following is not one of the main areas covered in the examinations that must be taken in order to achieve the designation of Chartered Financial Analyst? A. Investment management ethics B. Securities analysis C. Securities marketing techniques D. Portfolio management

Q: To become a CFA, you must do all of the following except which one? A. Pass three exams designed to ensure that you have sufficient knowledge of investments. B. Obtain 3 years of work experience in money management. C. Become a member of a local Society of the Financial Analysts Federation. D. Divest all your own stock holdings to eliminate any potential conflicts of interest with client recommendations.

Q: Just 2 months after you put money into an investment, its price falls 25%. Assuming that none of the investment fundamentals have changed, which of the following actions would evidence the greatest risk tolerance? A. You sell to avoid further worry and buy something else. B. You do nothing and wait for the investment to come back. C. You buy more, thinking that if it was a good investment before, now it's not only good but cheap too. D. You sue your financial adviser.

Q: If an investor wants to invest 100% of her portfolio in safe assets but does not want to manage her portfolio, she should invest in __________. A. a money market fund B. a growth stock fund C. several different money market instruments D. several different stocks

Q: At the early stage of an individual's working career, his or her retirement portfolio should probably consist mostly of _______. A. annuities B. stocks C. bonds D. commodities

Q: The major asset most people have during their early working years is their ________. A. home B. stock portfolio C. earning power derived from their skills D. bond portfolio

Q: A portfolio manager indexes part of a portfolio and actively manages the rest of the portfolio. This is called a _________ strategy. A. passive-aggressive B. passive core C. passively active D. balanced fund

Q: Price volatility is greatest on which one of the following investments? A. Commercial paper B. 20-year zero-coupon bonds C. Treasury notes D. Treasury bills

Q: For a bank, the difference between the interest rate charged to borrowers and the interest rate paid on liabilities is called the __________. A. insurance premium B. interest rate spread C. risk premium D. term premium

Q: Which one of the following would be considered a "cash equivalent" investment? A. Treasury bills B. Common stock C. Corporate bonds D. Real estate

Q: A mutual fund may not hold more than ______ of the shares of any publicly traded company. A. 5% B. 10% C. 25% D. 50%

Q: You are thinking of investing in one of two assets. Asset A has higher systematic risk than asset B. You can be sure that asset A's _______ return will be higher than asset B's, but you can't be sure if asset A's _______ return will be higher than asset B's. A. realized; expected B. real; nominal C. expected; realized D. nominal; expected

Q: If the maturity of a bank's assets is much longer than the maturity of its liabilities and it wants to limit its interest rate risk, the bank may _________. A. prefer to invest in long-term bonds in its asset portfolio B. prefer to invest in equities in its asset portfolio C. prefer to invest in variable-rate assets D. decide to increase its fixed-rate mortgage holdings

Q: A ______ insurance policy provides death benefits, with no buildup of cash value. A. whole-life B. universal life C. variable life D. term life

Q: My pension plan will pay me a yearly retirement amount equal to 2% of my highest annual salary for each year of service. I must have ___________. A. a defined benefit plan B. a defined contribution plan C. an endowment fund D. a variable annuity

Q: In a defined contribution pension plan, the _____ bears all of the fund's investment performance risk. A. employer B. employee C. fund manager D. government

Q: In a defined benefit pension plan, the _____ bears all of the fund's investment performance risk. A. employer B. employee C. fund manager D. government

Q: To _____ means to mitigate a financial risk. A. invest B. speculate C. hedge D. renege

Q: One way that life insurance firms can hedge the risk created by offering whole-life insurance policies is by ________________. A. holding long-term bonds B. holding equities C. holding short-term bonds D. exercising its right to terminate the policy

Q: A portfolio consists of three index funds: an equity index accounting for 40% of the total portfolio, a bond index accounting for 30% of the total portfolio, and an international index accounting for 30% of the total portfolio. After each quarter the portfolio manager buys and sells some of each sector to preserve the original weights for each sector. This is an example of ____________. A. a passively managed core with an actively managed component B. a totally passively managed fund C. passive asset allocation with active security selection D. active asset allocation with passive security selection

Q: A portfolio consists of three index funds: an equity index, a bond index, and an international index. The portfolio manager changes the weights periodically according to forecasts for each sector. This is an example of __________. A. a passively managed core with an actively managed component B. a totally passively managed fund C. passive asset allocation with active security selection D. active asset allocation with passive security selection