Cima C03 Exam Question No 34

Question No 34:

What is Simple "And" Probability?
Simple Multiplication: not mutually exclusive outcomes

P(A and B)=P(A)P(B)

e.g - rolling a die and flipping a coin - they are unrelated, so we multiply the P of rolling a given number on the die (1/6) by the P of getting a desired result on the coin (1/2) ∴1/6*1/2=1/12

Cima C03 Exam Question No 33

Question No 33:

Read the following statements about the period 1998 to 2001:
(i) Inflation has increased by more than money wages.
(ii) Money wages have increased by 5% each year, year on year.
Which ONE of the following is true?

A. (i) only
B. (ii) only
C. Both (i) and (ii)
D. Neither (i) nor (ii)

Answer: A

Cima C03 Exam Question No 32

Question No 32:

Rebase to a Previous Index

• Value in current index/100)*value of rebase year in previous index eg)
• In 2006, a commodity had an index score of 111 based on the rebased value in 2001
• The value in 2001 of the commodity was 132 in the old index (now 100, since it is the new base year)
• To express 2006 in terms of the previous index base:
• (111/100) *132 = 146.52

Cima C03 Exam Question No 31

Question No 31:

Definition of the splicing an index?

Aka - rebasing - redefining the base year of an index

creates a situation where the P₁ value would be <100

eg) if P₁ were for 1993 and P₀ were 2000 and there was inflation in the commodity price you might see the index relative for 1993 (P₁) at 97, etc.

Cima C03 Exam Question No 30

Question No 30:

In an internal audit of 200 invoices, the following numbers of errors were discovered:

Number of Errors            Number of Invoices
0                                                    60
1                                                    30
2                                                    40
3                                                    40
4                                                    20
5                                                    10
6 or morew                                     0

The expected value of the number of errors per invoice is

A. 1∙8
B. 2
C. 2∙1
D. 3

Answer: A

Cima C03 Exam Question No 29

Question No 29:

Index Relatives: Fixed Base vs. Chain Base Methods

 Fix base method = for commodities in which the basic nature is unchanged over time:
=(value in given year/value in base year)*100

Chain base method = for commodities where the basic nature changes over time:
=(this year's value/last year's value)*100   

Cima C03 Exam Question No 28

Question No 28:

What is Index Relatives?

Name given to the index number which measures the change in a single distinct commodity.

Formulae are given on the assessment - just remember that P₀ or Q₀ are the index base year value and P₁ or Q₁ are the values for the year in question.

Cima C03 Exam Question No 27

Question No 27:

What is standard Deviation (σ)?

• The square root of the variance
• The most common/important measure of spread

Formula given on the assessment

• For grouped data, use the Σf version, for ungrouped data use the standard 'n' version.

Cima C03 Exam Question No 26

Question No 26:

Difference between General "And" Probability?

General Multiplication: conditional outcomes
P(A and B)=P(B)*P(A/B)

eg- if sales don't improve, there's a 70% chance we'll go under - P(A). There's a 20% chance that sales will improve - P(B). What's the probability of us going under? (PB does not depend on PA, but PA depends on PB) ∴ P(B)P(A/B)=0.80.7=0.56 - there's a 56% chance of us going under.

Cima C03 Exam Question No 25

Question No 25:

Enter the formula required in Excel to perform the following calculation to the specified decimal places in each case:
37/9 X 4.34 ( to 2d.p)


=ROUND(37/9*4.34,2)

Cima C03 Exam Question No 24

Question No 24:

A group of 10 people share the cost of a new year`s eve for 40 friends. The price of the meal per person is £20 plus £4 for wine and £2 for coffee. Calculate the amount each of the 10 will need to pay. Write down a formula which could be input into one cell in Excel to calculate the amount that the 10 will need to pay.
=40*(20+4+2)/10)

Cima C03 Exam Question No 23

Question No 23:

Below is an extract from an Excel spreadsheet?

For the given data, give the Excel formulae that would be required in Excel to calculate the ROI and NPV in cells B10 and B11 respectively.

Answer: ROI= Average(B2:B5)/B1 NPV= NPV(B7,B2:B5)-B1

Cima C03 Exam Question No 22

Question No 22:

You borrow £3,000 and pay 10% each year interest. Ignoring capital, if you pay this interest at the end of each year, what is the present value of the interest payable at the end of the third year?

A. (3/10) x £300 x 3
B. (7/10) x £300
C. (10/11)^3 x £300
D. £3000 x (11/10)^3

Answer: C

Cima C03 Exam Question No 21

Question No 21:

A fixed-interest $200,000 mortgage, with annual interest compounded at 6% each year, is to be repaid by 15 equal year-end repayments of $R.
The annual repayment $R will be closest to

A. $14,133.
B. $20,593.
C. $31,954.
D. $83,400.

Answer: B

Cima C03 Exam Question No 20

Question No 20:

£2,000 is invested in a bank account. The account earns compound interest at 5% per year.
The investment will have almost doubled in value after?

A. 11 years
B. 12 years
C. 13 years
D. 14 years

Answer: D

Cima C03 Exam Question No 19

Question No 19:

£2,000 is invested in a bank account. The account earns compound interest at 5% per year.
The cash value of the account, to the nearest £, at the end of five years will be?

A. £2,680
B. £2,553
C. £2,431
D. £2,335

Answer: B

Cima C03 Exam Question No 18

Question No 18:

An annual year-end income of £15,000 is required in perpetuity. Assuming a fixed rate of interest of
9% each year, and ignoring administrative charges, the sum required now to purchase the annuity is
closest to

A. £13,650.
B. £135,000.
C. £150,000.
D. £167,000.

Answer: D

Cima C03 Exam Question No 17

Question No 17:

An annual (year-end) income of £10,000 is required in perpetuity. If there is a fixed interest rate of 8% each year and administrative charges are ignored, the lump sum investment necessary now is closest to?

A. £9,260
B. £80,000
C. £100,000
D. £125,000

Answer: D

Cima C03 Exam Question No 16

Question No 16:

The following time series represents the weekly sales (£000) of a particular product:
Weekly Sales
£000
1             200
2             240
3             250
4             220
5             230
6             260
Assuming an additive model, and based on the information given, the seasonally-adjusted sales figure (£000) for week 4 will be

A. 237·5
B. 222·5
C. 220·0
D. 202·5

Answer: A

Cima C03 Exam Question No 15

Question No 15:

The sales of a product are recorded monthly for 24 months. The four-point (centred) moving averages are calculated and plotted on a graph.
How many moving average points are plotted?

A. 20
B. 21
C. 22
D. 24

Answer: B

Cima C03 Exam Question No 14

Question NO 14:

At a second checkout in the same supermarket as in sub-question, the service time has an arithmetic mean of 5 minutes and a standard deviation of 1 minute.
The coefficient of variation will be?

A. 50%
B. 20%
C. 5%
D. 2%

Answer: B

Cima C03 Exam Question No 13

Question No 13:

For a set of six pairs of observations for the variables X (number of employees in hundreds) and Y
(product sales in thousands of units), the following results were obtained:
ΣX = 1 ΣY = 15 ΣX2 = 15 ΣY2 = 65 ΣXY = 7
The correlation coefficient is nearest to

A. 0·22
B. 0·47
C. 0·90
D. - 0·32

Answer: A

Cima C03 Exam Question No 12

Question No 12:

 The number of daily complaints to a railway company has an average (arithmetic mean) of 12 and a standard deviation of 3 complaints.
The coefficient of variation, measured as a percentage, is therefore

A. 0∙25%.
B. 4%.
C. 25%.
D. 400%.

Answer: C

Cima C03 Exam Question No 11

Question No 11:

For a certain group of students, the coefficient of rank correlation between their performance in
Accounting and their performance in Law is –1. The coefficient of rank correlation between their performances in Law and FBSM is also –1. Therefore, the coefficient of rank correlation between their performance in Accounting and their performance in FBSM is

A. –2
B. zero
C. +1
D. impossible to determine from the information given.

Answer: C

Cima C03 Exam Question No 10

Question No 10:

Mail order buyers of Brand X, classified by area and age (years)

Area/Age    Under 25     25-44    45-64     65+
North        400         350       300      250
South        600         550       500      450
East         200         150       100      50
West         400         350       300      250
Total       1,600        1,400     1,200    1,000
The probability that a randomly-selected Brand X buyer is from the North and under 25
years of age is (to 2 decimal places)

A. 0∙08
B. 0∙25
C. 0∙31
D. 0∙56

Answer: A

Cima C03 Exam Question No 9

Question No 9:

Three people are carrying out independent functions during an internal audit. It is known that in each of the three separate areas being investigated there is a serious error.
From past experience, it is estimated that the (independent) chances of the individuals finding the serious error in their area are 0∙8, 0∙7 and 0∙6.
The probability that at least one of the serious errors will be found is

A. (0∙8 x 0∙3 x 0∙4) + (0∙2 x 0∙7 x 0∙4) + (0∙2 x 0∙3 x 0∙6)
B. 1 – (0∙2 x 0∙3 x 0∙4)
C. 1 – (0∙8 x 0∙7 x 0∙6)
D. none of the above.

Answer: B

Cima C03 Exam Question No 8

Question No 8:

In a group of 100 players, 30 are male, 55 are at pro level, and 6 of the males are at beginner level. A player chosen at random is female. What is the probability that she is not at pro level.

A .80
B .56
C .44
D.20

Answer: C

Cima C03 Exam Question No 7

Question No 7:

A trader’s weekly costs, TC, are less than or equal to $100. Weekly revenue, R, is a minimum of $120.
Which ONE of the following statements is true?

A. TC < $100 and R > $120 and R > TC
B. TC ≥ $100 and R ≤ $120 and TC > R
C. TC ≤ $100 and R > $120 and R < TC
D. TC ≤ $100 and R ≥ $120 and R > TC

Answer: D

Cima C03 Exam Question No 6

Question No 6:

The estimated total cost of each unit of a product is £12 (± £1), and the estimated selling price of each unit is £20 (± £3). The estimated profit per unit will be

A: £8 (± £4)
B: £8 (± £3)
C: £8 (± £2)
D: £8 (± £1)

Answer: A

Cima C03 Exam Question No 5

Question No 5:

A trader’s weekly costs, TC, are less than or equal to $100. Weekly revenue, R, is a minimum of $120.
Which ONE of the following statements is true?

A: TC < $100 and R > $120 and R > TC
B: TC ≥ $100 and R ≤ $120 and TC > R
C: TC ≤ $100 and R > $120 and R < TC
D: TC ≤ $100 and R ≥ $120 and R > TC

Answer: D

Cima C03 Exam Question No 4

Question No 4:

The estimated total cost of each unit of a product is £12 (± £1), and the estimated selling price of each unit is £20 (± £3). The estimated profit per unit will be

A. £8 (± £4)
B. £8 (± £3)
C. £8 (± £2)
D. £8 (± £1)

Answer: A

Cima C03 Exam Question No 3

Question No 3:

A company’s market value has fallen from £32 billion to £2 billion in four years. The average annual
percentage decline in market value is closest to

A. 20%.
B. 40%.
C. 50%.
D. 100%.

Answer: C

Cima C03 Exam Question No 2

Question No 2:

The following formula is used in the financial analysis of dividends:
R= (V/P)+G
When the formula is rearranged, with P in terms of the other variables, P is equal to

A. (R/V)-G
B. (R-G)/V
C. (V/R)-G
D. V/R-G

Answer: D

Cima C03 Exam Question No 1

Question No 1:

A retailer buys a box of a product, which nominally contains Q units. The planned selling price of each unit is £P. If both P and Q have been rounded to ± 10%, then the maximum rounding error in total revenue is

A. 10%
B. 20%
C. 21%
D. 0∙1Q x 0∙1P

Answer: C