B5/B6

Question 1

Biggest risk of holding cash in a money market account

Answer 1

FDIC accounts (money market) have extremely low interest rates, so biggest risk is rising inflation eroding value of money

Question 2

Equity carve out

Answer 2

Simple IPO story:

Company sells shares sell to the public (through IPO), parent company maintains controlling interest

Question 3

Spin off

Answer 3

Brand new company, parent company and new company are separated

Question 4

Setting a ceiling price below the equilibrium price does what

Answer 4

Creates a shortage

Ex: gas now cost $1 per gallon, everyone wants it now, not enough to go around so a shortage

Question 5

Three ways fed can increase money supply:

Answer 5

1) buy government securities in open market
2) LOWER discount rate
3) LOWER required reserve ratio

Question 6

4 factors giving customers the bargaining power

Answer 6

Think like street vendors in Bali selling an I love Bali t-shirt:

• one group of customers make up large volume of the business - all tourists
• much information is avail to customers - can see all other vendors & prices
• low switching costs - can just walk down street
• high # alternate suppliers/sellers - streets lined with exact product

Question 7

Competitive market, equal increase in demand and supply does what

Answer 7

Drives up market clearing quantity!

NOTE; no price change (draw the graph)

Question 8

Monopolistic Competition vs Perfect Competition (difference in price & variety of products)

Answer 8

Remember: Monopolistic competition is like a coffee shop, perfect competition is like a farmers market

Under monopolistic competition (coffee shop) they produce a greater variety of products, at a higher cost per unit because they want to have product differentiation, since there are so many substitute options

Under perfect competition, the variety is low and cost per unit is low, because there is such high competition and no differentiation

Question 9

When economy is at the “peak” what is unemployment

Answer 9

Peak cycle means unemployment is at its natural rate of unemployment; cyclical unemployment is at 0%

Question 10

Performance of quality assurance occurs in which process

Answer 10

Implementation

standard of quality is broadly defined in authorization process, then precisely defined in planning, and performance occurs in the implementation process, and close process occurs after the performance of the quality deliverables

Question 11

Audit trail

Answer 11

Allows users to trace transactions from the system to the source documents
(Detective control)

Question 12

Acceptance test

Answer 12

Ensures software works for an intended user in his or her own work environment
Usually developer isn’t present, just the intended user will use

Question 13

Validation tests

Answer 13

“Did we build the right thing?”

Focuses on user actions and user outputs within a system

Question 14

Hash total

Answer 14

Check if numbers that are not normally added have been processed incorrectly. This is a detective control

Question 15

Just in time production environment characteristics

Answer 15

Scheduling resources to deploy just in time to meet customer requirements.

You have LOWER inventory levels, so MORE purchase orders with fewer units each
Beneficial to switch to JIT system if you have higher/increasing inventory carrying costs, or your cost per purchase order is decreasing

Basically, if you can handle more POs (cost per PO isn’t increasing) and you have high inventory carrying costs, JIT is the move

Question 16

Enterprise resource planning system is designed to:

Answer 16

Integrate data from all aspects on an organization’s activity

Question 17

Routers

Answer 17

Hardware devices that manage network traffic and assign IP addresses to different devices

Question 18

Gateways

Answer 18

Intermediary (why its called gateway) devices on a network that transform data into different protocols so data can flow between networks

Question 19

AIS

Answer 19

Accounting information system

Processes and tracks data resulting from business transactions (historical, not predictive)

Question 20

Change management

Answer 20

Systematic approach to transititioning/ transforming an organizations goals
I.e hiring an outside consultant to help a company implement new tech

Question 21

Sanity test

Answer 21

Type of system test (which is used to assess overall performance of a newly implemented IT platform)

Sanity test gauges whether a system behaves as it was meant to (validating logical reasoning of the system)

Question 22

Characteristics of oligopoly

Answer 22

Kinked demand curve - other firms will match price cuts, but ignore price increases
Oligopoly has few competitors (think media or tellecomunications (nbc, Verizon)

Question 23

Sequence of a business cycle (Elena performed considerably tough)

Answer 23

Expansion, peak, contraction, and trough

Question 24

5 business process management activities

Answer 24

DEMMO
Design
Execution
Modeling
Monitoring 
Optimization

Question 25

Six sigma; DMAIC

Answer 25

Existing product and business process improvements: 
Define problem
Measure key aspects of current process
Analyze the data 
Improve or optimize curent processes
Control

Question 26

Six sigma; DMADV

Answer 26

New product or business process development
Define design goals
Measure CTQ
Analyze design alternatives 
Design optimization
Verify design

Question 27

Kaizen

Answer 27

(Continuous improvement)
Occurs at mfg stage
Ongoing search of cost reductions to ensure resources tax within target costs

Question 28

Four important characteristics a supply chain mgmt system helps with

Answer 28

What, when, where goods were delivered

And how much goods cost

Question 29

Hot site

Answer 29

Location that is equipped with necessary hardware & possibly software
Configured to be used for the processing needs of the client

Question 30

Logical access controls

Answer 30

Control access to information within IT system
Authentication controls (passwords, biometrics, multi factor authentication)
User access controls

Question 31

Vulnerability controls

Answer 31

Review over application and software on an ongoing basis (think Anti-virus software)
Patch management, data encryption

Question 32

Audit logs are what type of control

Answer 32

Detective

Question 33

Denial of service attack

Answer 33

One computer bombards another with a flood of information

Question 34

Analysis of internal and external factors that contribute to an organizations success

Answer 34

SWOT ANALYSIS

Question 35

Porters five forces

Answer 35

Bargaining power of customers
Barriers to market entry
Existence of substitute product
Market competitiveness
Bargaining power of suppliers

Question 36

A basic detimernant of elasticity of demand is

Answer 36

of substitutes available for the product

If a lot of substitutes are available - price elasticity of demand will be high

Question 37

What causes cost-push inflation

Answer 37

An increase in nominal wages

Question 38

What does “price elasticity of demand of 2.0” imply

Answer 38

Demand will change by 2x (as a percentage) for any change in price. This means the demand is ELASTIC

Question 39

If demand is price unit elastic, how does a change in price impact total revenue

Answer 39

A change in price will have no effect on total revenue if demand is price unit elastic

Question 40

Systems steering committee responsibility

Answer 40

Oversees IT systems, and approves long range plans

Question 41

Project development team role

Answer 41

Responsible for specific project aspects, like planning, tracking, change management

Question 42

Who structures IT governance controls?

Answer 42

Executive management is responsible for designing/structuring IT governance controls for middle managers to enforce

Question 43

In asymettric encryption, what is purpose of public and private keys

Answer 43

Public key encrypts messages, and private key decrypts the message at the other end