ETS Major Field Test - MBA EXAM QUESTIONS AND ANSWERS 2026

Which of the following organizations is most likely

to use project financing?

(A) A small start-up

(B) A financial services firm with an extensive

client list

(C) A large consumer goods company

(D) A large public utility involved in

infrastructure development

After an extensive recruitment process to select

well-qualified individuals, a large percent of

a company's new hires resigned within the first

month of the job. Which of the following is the

most likely explanation for this situation?

(A) The training process to prepare the new hires

for their assigned tasks was inadequate.

(B) The health benefits provided by the company

were not competitive with those of the rest

of the industry.

(C) The starting salary for the new hires was not

competitive with that of the rest of the

industry.

(D) The new hires lacked the basic skills required

to learn the job.

Prosco Ltd. employs a process cost system.

Inspection of units occurs at the 50 percent mark.

Defective units are then removed from the process,

and their cost ($4.50) is absorbed by the good units.

Prosco has recently been approached by a firm

wishing to buy the defective units for a special use.

The firm would require Prosco to modify the

defective units at a unit cost of $2.00. If Prosco

sells the defective units to the firm for $5.00 each,

how would Prosco's reported income be affected?

(A) It would decrease by $4.50 per unit sold.

(B) It would decrease by $1.50 per unit sold.

(C) It would increase by $3.00 per unit sold.

(D) It would increase by $5.00 per unit sold

Some companies have little, if any, net income or

earnings, yet they seem to have all the money they

need for capital expenditures. Which of the

following best explains how such companies

operate?

(A) They have good cash flows.

(B) They lease capital equipment that does not

show up on balance sheets.

(C) They have accounts with many different

banks.

(D) They issue warrants to their officers.

The Sintar Corporation has just announced that it

will pay $1.10 per share in dividends to its

stockholders in the current quarter. The prior

quarter's dividend was $1.00 per share. The

announcement indicates which of the following?

(A) Management is sending a signal that it

expects the economy to expand.

(B) Management is sending a signal that the

company has good projected future earnings.

(C) While the company was able to pay a higher

dividend, management preferred a more

conservative figure.

(D) The company has overextended its cash

position and may have liquidity problems in

the future.

Wave Inc. is a telecommunications company that

wants to become involved in e-commerce. It has to

decide whether to develop a business-to-business or

business-to-consumer strategy. As Wave's strategic

planner, you have been asked to develop a business

plan for each opportunity and present these to senior

management. The answer to which of the following

questions is most important to know before starting

your plan?

(A) What are the company's core competencies?

(B) What is the potential market size?

(C) What is the impact on the estimated revenue?

(D) Does the company have e-commerce

capabilities?

If you were the holder of a call option (having cost

you $2) on some stock with an exercise price of

$20, it would be best for you to exercise your option

when the market price is at

(A) $18

(B) $20

(C) $22

(D) $24

Increased globalization and technological change,

particularly in telecommunications, enable more

organizations to adopt which of the following

organizational structures?

(A) Functional

(B) Matrix

(C) Network

(D) Mechanistic

A new local Super Store publicly announced that

when more than three people are standing in line

at cash registers, additional checkout-lines will

be opened. After the announcement, customers

quickly noticed that the additional lines were not

opened until six or seven people were standing in

line. This indicates a gap between

(A) customer expectation and management

perception of customer expectation

(B) management perception of customer

expectation and service quality

specifications

(C) customer expectation and internal

management communication

(D) actual service delivery and how service quality

was communicated

All of the following can be considered in the

evaluation of a business unit EXCEPT

(A) wages paid to labor

(B) projected annual revenues of competitors

(C) the cost of materials used in the production

process

(D) the price at which goods produced are sold

The sales division of a corporation is considering an

internal product transfer because of excess demand.

What is the lowest acceptable transfer price for the

product?

(A) The amount that the company would have to

pay to acquire a similar product

(B) The variable cost of producing a unit of

product

(C) The full absorption cost of producing a unit of

product

(D) The difference between the market price and the

costs recaptured by transferring internally

You are considering investing in one of the four

securities below, characterized only as follows.

Security W X Y Z

Expected return 15% 15% 17% 17%

Standard deviation

of return

25% 30% 25% 30%

Which security makes the most prudent investment?

(A) W

(B) X

(C) Y

(D) Z