Practice Post UTME AL-HIKMAH UNIVERSITY commerce 2022 Past Questions

Question 1

In a sole trade business, what is the primary advantage of using a sole proprietorship structure?

A. Limited liability

B. Tax benefits

C. Easy setup and management

Correct D. Flexibility in decision-making

Correct Answer: D

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Question 2

A company has a capital structure consisting of 60% equity and 40% debt. If the company's cost of equity is 12% and the cost of debt is 6%, what is the company's weighted average cost of capital (WACC)?

A. 8%

Correct B. 9%

C. 10%

D. 11%

Correct Answer: B

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Question 3

A bank has a reserve requirement of 10% and a cash reserve of ₦100,000. If the bank's deposits are ₦1,000,000, what is the bank's required reserve ratio?

A. 5%

Correct B. 10%

C. 15%

D. 20%

Correct Answer: B

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Question 4

A company has a policy of paying dividends quarterly. If the company's annual dividend payment is ₦500,000, what is the company's quarterly dividend payment?

Correct A. ₦125,000

B. ₦150,000

C. ₦175,000

D. ₦200,000

Correct Answer: A

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Question 5

A foreign trade agreement between two countries involves the exchange of goods worth 100,000. If the exchange rate is 1 USD = 360 Naira, what is the value of the goods in Naira?

Correct A. ₦36,000,000

B. ₦36,000,000

C. ₦36,000,000

D. ₦36,000,000

Correct Answer: A

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Question 6

A bank's return on assets (ROA) is a measure of its ability to generate earnings from its assets. If a bank has an ROA of 0.02 and its total assets are ₦10 billion, what is its net income?

A. ₦200 million

Correct B. ₦400 million

C. ₦600 million

D. ₦800 million

Correct Answer: B

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Question 7

A company's marketing mix is a combination of the 4 Ps: product, price, promotion, and place. If a company decides to increase its product quality, what will be the effect on its price?

A. Increase

B. Decrease

C. No effect

Correct D. Depend on market conditions

Correct Answer: D

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Question 8

A risk management strategy involves identifying, assessing, and mitigating risks. If a company identifies a risk that has a 20% chance of occurring and a potential loss of ₦1 billion, what is the expected value of this risk?

Correct A. ₦200 million

B. ₦400 million

C. ₦600 million

D. ₦800 million

Correct Answer: A

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Question 9

A company's supply chain involves the movement of goods from suppliers to customers. If a company decides to implement a just-in-time (JIT) inventory system, what will be the effect on its inventory costs?

A. Increase

Correct B. Decrease

C. No effect

D. Depend on market conditions

Correct Answer: B

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Question 10

A company's financial statements include the balance sheet, income statement, and cash flow statement. If a company has a high current ratio, what does this indicate about its liquidity?

Correct A. High liquidity

B. Low liquidity

C. No effect

D. Depend on market conditions

Correct Answer: A

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Question 11

A sole trader's business is considered a separate legal entity from its owner. What is the primary reason for this separation?

A. Limited liability

B. Separate taxation

C. Separate accounting

Correct D. Separate legal identity

Correct Answer: D

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Question 12

A company's articles of association can be amended by a special resolution passed by a majority of at least 75% of the members present and voting. What is the purpose of this special resolution?

A. To increase the company's authorized capital

B. To change the company's name

Correct C. To alter the company's objects

D. To reduce the company's authorized capital

Correct Answer: C

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Question 13

A transport company uses a just-in-time inventory system to manage its warehouse. What is the primary advantage of this system?

A. Reduced storage costs

Correct B. Improved inventory accuracy

C. Increased customer satisfaction

D. Reduced transportation costs

Correct Answer: B

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Question 14

A business owner purchases an insurance policy to protect against loss of revenue due to unforeseen events. What type of insurance policy is this?

A. Property insurance

B. Liability insurance

Correct C. Business interruption insurance

D. Professional indemnity insurance

Correct Answer: C

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Question 15

A company uses a first-in-first-out (FIFO) inventory system to manage its warehouse. What is the primary advantage of this system?

A. Reduced storage costs

B. Improved inventory accuracy

Correct C. Reduced inventory obsolescence

D. Increased customer satisfaction

Correct Answer: C

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Question 16

A company is sued for violating the Consumer Protection Act. The company's defense is that the consumer failed to read the fine print on the contract. However, the consumer claims that the company's salesperson assured them that the contract was fair and that they would not be charged any additional fees. Which of the following is the most likely outcome?

A. The court will rule in favor of the company because the consumer failed to read the fine print.

B. The court will rule in favor of the consumer because the company's salesperson assured them that the contract was fair.

Correct C. The court will rule in favor of the consumer because the company's actions were deceptive and unfair.

D. The court will rule in favor of the company because the consumer failed to negotiate the terms of the contract.

Correct Answer: C

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Question 17

A sole trader is sued for negligence by a customer who was injured while using a product sold by the trader. The customer claims that the trader failed to provide adequate warnings and instructions for the safe use of the product. Which of the following is the most likely outcome?

Correct A. The court will rule in favor of the customer because the trader was negligent in providing warnings and instructions.

B. The court will rule in favor of the trader because the customer assumed the risk of using the product.

C. The court will rule in favor of the customer because the trader failed to provide adequate product liability insurance.

D. The court will rule in favor of the trader because the customer failed to follow the instructions for safe use.

Correct Answer: A

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Question 18

A company is considering investing in a foreign market. The company's financial advisor recommends that they purchase a foreign currency option to hedge against exchange rate risk. Which of the following is the most likely outcome?

Correct A. The company will benefit from the foreign currency option because it will protect them against exchange rate fluctuations.

B. The company will lose money from the foreign currency option because it will not be able to hedge against exchange rate risk.

C. The company will not benefit from the foreign currency option because it will not be able to take advantage of favorable exchange rates.

D. The company will not lose money from the foreign currency option because it will be able to hedge against exchange rate risk.

Correct Answer: A

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Question 19

A bank is considering issuing a new type of loan product that will offer customers a lower interest rate than their current loan products. However, the bank's risk management team is concerned that the new loan product will increase the bank's credit risk. Which of the following is the most likely outcome?

A. The bank will benefit from the new loan product because it will attract more customers and increase revenue.

Correct B. The bank will lose money from the new loan product because it will increase credit risk and lead to defaults.

C. The bank will not benefit from the new loan product because it will not be able to hedge against credit risk.

D. The bank will not lose money from the new loan product because it will be able to manage credit risk effectively.

Correct Answer: B

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Question 20

A company is considering exporting goods to a foreign market. The company's logistics manager recommends that they use a freight forwarder to handle the transportation of the goods. Which of the following is the most likely outcome?

Correct A. The company will benefit from using a freight forwarder because it will reduce transportation costs and increase efficiency.

B. The company will lose money from using a freight forwarder because it will increase transportation costs and decrease efficiency.

C. The company will not benefit from using a freight forwarder because it will not be able to take advantage of favorable transportation rates.

D. The company will not lose money from using a freight forwarder because it will be able to manage transportation costs effectively.

Correct Answer: A

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Question 21

A company's marketing strategy involves creating a sense of urgency among potential customers. This strategy is an example of which of the following?

Correct A. Scarcity principle

B. Loss aversion principle

C. Endowment effect principle

D. Social proof principle

Correct Answer: A

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Question 22

A firm's production function is given by Q = 2L^0.5K^0.5. If the firm wants to increase its output by 20% while keeping the capital stock constant, what percentage increase in labor is required?

A. 10%

Correct B. 20%

C. 30%

D. 40%

Correct Answer: B

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Question 23

A consumer has a budget constraint of 100 units of currency, and the prices of two goods are 5 units and 10 units respectively. If the consumer's indifference curve is tangent to the budget line at the point where the consumer is consuming 20 units of the first good, what is the consumer's marginal rate of substitution?

A. 1

Correct B. 2

C. 3

D. 4

Correct Answer: B

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Question 24

A firm is considering two different modes of transportation for its goods: trucking and rail. The cost of trucking is 100 units of currency per unit of distance, while the cost of rail is 50 units of currency per unit of distance. If the firm needs to transport 1000 units of goods over a distance of 1000 units, what is the total cost of transportation using rail?

A. 50,000

Correct B. 75,000

C. 100,000

D. 125,000

Correct Answer: B

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Question 25

A consumer has a utility function given by U = 2x + 3y. If the consumer's income is 100 units of currency and the prices of the two goods are 5 units and 10 units respectively, what is the consumer's optimal consumption bundle?

A. (10, 20)

Correct B. (15, 15)

C. (20, 10)

D. (25, 5)

Correct Answer: B

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