Practice Multiple-Choice Questions – Set 1

(Based on slides and problems done in class)

1. The “Summary of Key Outcomes” section:

A. Presents a quick summary to help make good business decisions
B. Usually comes right after inputs sections to help observe the change in key
outputs when one or more input values are changed
C. None of the above
D. Both (A) and (B)

2. I am going to build a new house. Which of the following Excel formulae should I
write to calculate my monthly repayments of the loan at an annual interest rate of
6% and if I borrow $4,00,000? Assume a 15 year repayment period.
A. = PMT(6%/12,180,$400000)
B. = PMT(6%/12,15,$400000)
C. = PMT(6%,15,$400000)
D. None of the above

3. If in Question 2, I am unsure about the annual interest rate that I will receive,
which of the following methods should I use to find out how the monthly repayment
varies based on the annual interest rate?
A. One-way data table
B. Two-way data table

4. In spreadsheet models, a base case is often drawn from current policy or

common practice. True or False?
A. True
B. False

5. A structural what-if analysis explores

A. how a change in the model’s structure leads to change(s) in outcome(s)
B. how a change in the parameter(s) leads to change(s) in outcome(s)
C. how a change in the decision(s) leads to change(s) in outcome(s)
D. None of the above

6. A decision is:
A. an uncontrollable input variable
B. a controllable input variable
C. a controllable outcome
D. an uncontrollable outcome

7. An influence diagram hides the “spider-web” of relationships among variables

in a problem whereas a black-box diagram uncovers these relationships. True or
False?
A. True
B. False

8. Eduardo has gone to the store to buy fruit. He buys five apples at $0.40 each, six
oranges at $0.75 each, 0.6 kg of grapes at $7.25 per kg, and eight kiwis at $1.25
each. Which of the following Excel formulae will you write to compute how much
money he spent? Assume that you enter the amount of each type of fruits purchased
in cells B11:B14 and the unit cost of each type of fruits in cells C11:C14.
A. =sum(B11:B14)
B. =sum(B11:B14,C11:C14)
C. =sumproduct(B11:B14,C11:C14)

9. When we include a cell with a ____________ reference in a formula and then

copy the formula, the cell address changes to preserve the relative position
between the highlighted cell and the input cell.
A. Absolute
B. Relative

10. The acid test for whether a model sketch is sufficiently detailed is whether
someone else could build a spreadsheet from it without any significant redesign.
True or False?
A. True
B. False

Answer Key:
1.(D); 2(A); 3(A); 4(A); 5(A); 6(B); 7(B); 8(C); 9(B); 10(A)