CIMA Business Mathematics Fundamentals Past Papers PDF

Foundation Level Business Mathematics
3c FBSM
21 May 2001
Day 1 late afternoon
INSTRUCTIONS TO CANDIDATES
Read this page before you look at the questions
You are allowed TWO hours to answer this question paper.
Ensure that there is graph paper on your desk.
Answer the ONE question in section A (this has 25 sub-questions).
Answer TWO questions ONLY from section B.
Maths Tables and Formulae are provided elsewhere on the website, but were included within
the printed question paper.
Write your examination number in the boxes provided on the front of the answer book.
Write FBSM on the line marked "Subject" on the front of the answer book.
Write your examination number on the special answer sheet for section A which is on page 3 of
this question paper booklet.
Detach the sheet from the booklet and insert it into your answer book before you hand this in.
Do NOT write your name or your student registration number anywhere on your answer book.
Tick the appropriate boxes on the front of the answer book to indicate which questions you have
answered.
The Chartered Institute of Management Accountants 2001
FOR FREE CIMA, ACCA & CAT RESOURCES VISIT: http://kaka-pakistani.blogspot.com

SECTION A 50 MARKS
ANSWER ALL TWENTY-FIVE SUB-QUESTIONS 2 MARKS EACH
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correct
answer.
Question One
1.1 The numbers of rejects from 50 samples of the same size is as follows:
Number of rejects in each sample: 0 1 2 3 4 5

Number of samples (frequency of rejects): 5 10 10 20 5 0
The arithmetic mean number of rejects per sample is
A 22 B 24 C 3 D 20
1.2 The unit price of Brand X in May 2000 and May 2001 was as follows:
Year 2000 2001

Unit price of Brand X 140 175
The price relative for Brand X in May 2001, with base May 2000 = 100 is
A 80 B 120 C 125 D 135
1.3 On which ONE of the following graphics can the median readily be found without further
calculation?
A Bar chart
B Cumulative frequency curve
C Histogram
D Pie chart
1.4 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 01Q x 01P
FBSM 2 May 2001

1.5 The telephone costs of a company last year were 10,000, including Value Added Tax
(VAT) at 175%. It has been decided to allocate 60% of these telephone costs, excluding
VAT, to Central Administration and to allocate 30% of the remainder, excluding VAT, to
Finance.
The telephone costs (to the nearest ) to be allocated to Finance will be closest to
A 990 B 1,021 C 1,100 D 1,135
2CD
1.4 The formula Q = is used in stock control.
H
When the formula is rearranged, with H as the subject, H equals
2CD 4CD 2CD 2CD

A B C D
Q2 Q2 Q Q
1.7 A companys market for computer supplies has trebled in value in exactly six years. The
annual equivalent percentage growth rate in this market is (to 2 decimal places) closest to
A 1225 B 2009 C 2457 D 3333
1.8 The following statements are often made about simple random sampling.
(i) It ensures a representative sample.

(ii) It eliminates selection bias.
Which one of the following is always true?
A (i) only B (ii) only C Both (i) and (ii) D Neither (i) nor (ii)
1.9 A machine was purchased for 100,000. Depreciation is calculated using the reducing
balance method (that is, a constant percentage is applied each year to the written down
value). In the last balance sheet, the net book value of the machine, exactly four years old,
was shown as 50,000.
In the next balance sheet the machine should be shown to have a net book value, rounded to the
nearest 100, closest to
A 37,500 B 40,000 C 42,000 D 43,500
M2001 3 FBSM

1.10 In a particular country, a tax at 40% is payable on any gains on house sales not due to
inflation. A house was purchased there for $75,000 and sold for $250,000. Over the same
period, the countrys house price (inflation) index rose from 120 to 240.
The tax (to the nearest $) payable on the house sale is
A $28,000 B $37,500 C $40,000 D $70,000
1.11 Each of the following diagrams shows a histogram of data with equal area. The vertical
and horizontal scales of each histogram are identical.
Which set of data (histogram) has the largest standard deviation?
A B
Employees Employees
0 Wages 0 Wages
C D
Employees Employees
0 Wages 0 Wages
1.12 The lengths of steel rods are Normally distributed with a mean of 100mm and a standard
deviation of 5mm.
The percentage of steel rods with a length of less than 95mm is closest to
A 5% B 16% C 20% D 34%
1.13 The calculation of a rank correlation coefficient [formula given in the Mathematical Tables
sheet 3 on page 19], shows that ten pairs of data are found to be perfectly negatively
correlated.
Therefore, the value of d equals
A zero B 165 C 330 D none of these.
FBSM 4 May 2001

1.14 A 100,000 mortgage, with interest compounded at 11% each year, is to be repaid by 10
equal year-end payments of X, the first being due one year after the mortgage was
contracted.
X is closest to
A 16,111 B 16,273 C 16,981 D 25,937
1.15 The quarterly sales (units) of a company are given in the table below.
Year Q1 Q2 Q3 Q4
1997 13 52 56 79
1998 29 43 48 80
1999 24 55 46 75
Read the following statements.
(i) Annual sales are static.

(ii) The fourth quarter, Q4, has the highest quarterly sales in each of the three years.
(iii) The mean sales for the second quarter (Q2) equals the mean quarterly sales for the
whole period, 1997-99.
Which is true?
A (i) only B (i) and (ii) only C (ii) and (iii) only D (i), (ii) and (iii)
1.16 An accountant has to check a sample of invoices. The invoices are divided into three
groups, by value: under 100, 100 500 and over 500. Samples are then
selected randomly from each group.
Which ONE of the following sampling methods is involved?
A cluster B multi-stage C quota D stratified
1.17 The equations of two straight lines are given below:
Y=7+X Y = 9 + 3X
These lines intersect where the (X, Y) co-ordinates are equal to
A (1,6) B (1,6) C (1,8) D none of these
The following information is to be used for sub-questions 1.18 and 1.19
A scatter diagram shows the weekly total costs of production () in a certain factory plotted
against the weekly output (units). A broadly linear pattern is evident, with r = 09. The
regression equation is
COSTS = 1,500 + (15 x OUTPUT).
Fifty data points have been included in the analysis, with output ranging from 100 units to 1,000
units. Output next week is planned to be 500 units.
M2001 5 FBSM

1.18 Read the following statements about estimates.
(i) Weekly fixed costs are approximately 1,500.

(ii) Variable costs are approximately 15 per unit on average.
(iii) Next weeks production costs are likely to be about 9,000.
Which one of the following is true, all other things being equal?
A (i) and (ii) only B (i) and (iii) only C (ii) and (iii) only D (i), (ii) and (iii)
1.19 Read the following statements:
(i) There is very little correlation between weekly costs of production and production
level.
(ii) 90% of the variation in weekly costs is attributable to the amount produced.
(iii) Given the information, any forecast using the regression equation is likely to be very
unreliable.
Which one of the following is justified?
A (ii) only B (i) and (iii) only C (ii) and (iii) only D None of them
1.20 Three independent experts have estimated the probability of a companys future annual
sales:
Sales High [1m] Medium [05m] Low [025m]

Expert W 02 03 05
Expert X 01 04 05
Expert Y 01 06 03
The highest expected value for the companys estimated annual sales is given by
A W only. B X only. C Y only. D Both W and Y.
1.21 Details of an index number are given below:
Group Base Weight Index

Food & Drink 100 50 140
Travel & Leisure 100 30 130
Housing 100 20 120
All items 100 100 ??
The All items index number is closest to
A 130 B 133 C 135 D 146
FBSM 6 May 2001

1.22 For the following set of ten numbers, the median is 15:
10 11 12 13 14 16 17 18 19 20+X
This statement is false if X equals
A 5 B 4 C 3 D 2
1.23 Which of the following could have a value of 2 (minus 2)?
(i) Correlation coefficient

(ii) Slope of a regression line
(iii) Variance
A (ii) only B (i) and (ii) only C (i) and (iii) only D (ii) and (iii) only
1.24 The following data represents a time series for the last seven days:
2 6 10 6 10 14 10
Which ONE of the following moving averages would result in a straight-line graph?
A 2-point B 3-point C 4-point D None of these.
1.25 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 08, 07 and 06.
The probability that at least one of the serious errors will be found is
A (08 x 03 x 04) + (02 x 07 x 04) + (02 x 03 x 06)

B 1 (02 x 03 x 04)
C 1 (08 x 07 x 06)
D none of the above.
Total = 50 marks
M2001 7 FBSM

FBSM 8 M2001

M2001 9 FBSM

SECTION B 50 MARKS
ANSWER TWO QUESTIONS ONLY
Question Two
A Health and Fitness Centre has to buy one of two types of machine, A or B. Machine A would
cost 200,000, half of which would be due on delivery, the remainder a year later. Machine B
would cost 240,000, with payment due in the same way as for machine A. Both machines last
for 6 years and have an expected scrap value of 10% of their original cost price. Taking into
account operating costs and maintenance, machine A would produce year-end net operational
cash flows of 40,000 and machine B year-end net operational cash flows of 50,000. In both
cases the relevant cost of capital is 10% each year.
Required:
(a) Calculate the net present value of each machine.
(11 marks)
(b) Recommend which machine should be bought, giving your reasons and assumptions.
(4 marks)
(c) Estimate the internal rate of return for your recommended machine, using a graph or
calculation, and state its meaning.
(10 marks)
(Total = 25 marks)
FBSM 10 M2001

Question Three
A retailer sells computer games. Tabulated below are the unit sales of one of its games for the
last 13 quarters, together with the computer-generated trend equation and average seasonal
variations. For planning purposes, forecasts of sales are required for the remaining three
quarters of this year. (The brand was introduced in 1997.)
Sales Q1 Q2 Q3 Q4
1998 105 95 150 250
1999 80 70 110 180
2000 50 50 70 110
2001 30
Trend equation: S = 180 10T

where S = sales units and
T = time period in quarters
[For example, T = 1 in Q1 of 1998, T = 2 in Q2 of 1998, T = 3 in Q3 of 1998 .. T = 5 in Q1
of 1999 and so on.]
Q1 Q2 Q3 Q4
Average seasonal variations for the years
1998 2001 -40% -40% 0 +80%
Required:
(a) Plot a time series graph of the unit sales, and include the trend on the same graph.
(10 marks)
(b) Forecast the unit sales for the second, third and fourth quarters of 2001, and comment on
the reliability of these forecasts.
(8 marks)
(c) Interpret the key factors in this game's unit sales, 1998 2001.
(7 marks)
(Total = 25 marks)
M2001 11 FBSM

Question Four
A bakery produces fresh cakes each day in anticipation of demand. The variable costs of
production are 020 per cake and the retail price is 050 per cake. The daily demand for
cakes over the last four months is shown in the table below. At the end of each day, any
unsold cakes are sold to a local pig farmer for 005 per cake.
Daily demand (number 1 39 40 79 80 119 120 159 160 199
of cakes)
Number of days 10 20 30 30 10
(For practical purposes, you may assume the midpoints of the class intervals to be 20, 60, 100,
140, 180.)
Required:
(a) Prepare a 5 x 5 contribution table for each production / demand combination and calculate
the expected contribution for each level of production.
(20 marks)
(b) Recommend, with reasons and comments, the most suitable production policy for the
bakery.
(5 marks)
(Total = 25 marks)
End of paper
FBSM 12 M2001

3c FBSM
19 November 2001
You are allowed TWO hours to answer this question paper.
Ensure that there is graph paper on your desk.
Answer the ONE question in section A (this has 25 sub-questions, and is on pages 2 7).
Answer TWO questions ONLY from section B (these questions are on pages 8 10).
Maths Tables and Formulae were provided in the printed question paper and are available
elsewhere on the website.
Write your examination number in the boxes provided on the front of the answer book.
Write FBSM on the line marked "Subject" on the front of the answer book.
Write your examination number on the special answer sheet for section A. Detach the sheet
from the booklet and insert it into your answer book before you hand this in.
Do NOT write your name or your student registration number anywhere on your answer book.
Tick the appropriate boxes on the front of the answer book to indicate which questions you have
answered.

SECTION A 50 MARKS
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE
correct answer.
Question One
1.1 The sales of a product increase at a rate of 1% each month, month on month, for a
year. This is equivalent to an annual percentage rate of expansion closest to
A 113% B 120% C 127% D 130%
1.2 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
1.3 The numbers of hours worked last week by a companys 11 employees were:
P Q R S T U V W X Y Z
35 36 36 36 40 38 40 37 35 42 43
The median number of hours worked last week was
A 36 B 37 C 38 D 39
1.4 The straight lines Y = 2X + 4 and Y = 12 2X intersect where (X,Y) equals
A (2, 0) B (0,12) C (0,4) D (2,8)
1.5 A 1% random sample of mail order customers, each with a serial number, is to be
selected. A random number between 00 and 99 is chosen, and turns out to be 29.
Customers with serial numbers 29, 129, 229, 329 and so on are then selected to be the
sample.
This type of sample is termed
A biased. B multi-stage. C quota. D systematic.
FBSM 2 November 2001

1.6 The following formula is used in loan calculations:
2PC
R=
B(N + 1)
When the formula is rearranged, with N in terms of the other letters, N is equal to
2PC 2PC - 1
A 1 B C 2PC 1 D none of these
RB RB
1 1
1.7 The formula S 2 1 simplifies to
1 1 1 1
S2 10S 2
A
1 1 B S2 C
1 1 D 10 S 2
1.8 A garage has experienced the following regular weekly demand for its hire cars over the
last 50 weeks:
Weekly demand for hire cars: 0 1 2 3 4 5 or more

Number of weeks (frequency): 10 5 15 15 5 0
The expected value of weekly demand equals
A 20 cars. B 22 cars. C 25 cars. D none of these.
1.9 In the equation C = 6 + 05Q, C denotes the total cost of sales (in thousands of $) and Q
denotes the number of units sold (in thousands).
The total cost of sales for 3,000 units is therefore
A $1,50600 B $6,00150 C $7,50000 D $19,50000
1.10 The rank correlation coefficient between the ages and the scrap values of a certain type
of machine equals 1.
This value means that

A no correlation exists between the ages and the scrap values of these machines.
B perfect correlation exists.
C weak negative correlation exists.
D a calculation error has been made.
November 2001 3 FBSM

1.11 The lengths of a very large batch of metal rods are Normally distributed with a mean
length of 300 millimetres and a standard deviation of 10 millimetres.
The percentage of the batch which is longer than 285 millimetres is closest to
A 43% B 57% C 84% D 93%
1.12 A $20,000 new car depreciates in value by 20% 2% each year (year-end). (The car
depreciates by the reducing balance method, which means that a constant percentage
is applied each year to the written down value.)
Therefore, after 3 years, the cars value is most accurately estimated by
A between $9,491 and $11,027

B $10,240 $1,024
C $10,240 $205
D between $12,168 and $13,448
1.13 A traders 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
1.14 A company has to repay a mortgage by making 10 year-end payments of $50,000. The
compound interest rate is fixed at 8% each year.
Therefore, the size of the mortgage is closest to
A $266,750 B $307,250 C $335,500 D $356,900

The next two sub-questions, 1.15 and 1.16 are based on the following data.
1998 1999 2000 2001

Weekly money wages index (1998 = 100) 100 105 110 115
Index of inflation (1990 = 100) 180 190 200 210
1.15 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)
1.16 Real wages are money wages that have been adjusted for inflation, that is, deflated.
Over the period 1998 to 2001, real wages have (approximately)
A remained unchanged.
B decreased by 143%.
C decreased by 167%.
D increased by 145%.
b (b 2 4ac )
1.17 If aX + bX + c = 0, then X =
2a
If X 2X 24 = 0, then X equals
2 10 2 92 2 96 2 10
A B C D
2 2 2 2

The next three sub-questions, 1.18 1.20, are based on the following data.
A multiplicative time series model should be assumed.
Quarterly sales (units) of Brand X, 2001

Q1 Q2 Q3
Sales (units) 1,600 4,400 1,680
Seasonal variation 20% +100% 30%
1.18 The trend value for Q1 sales (units) is
A 1,280 B 1,920 C 2,000 D none of these.
1.19 The seasonal variation for Q4 in 2001 is
A 50% B 0% C +50% D none of these.
1.20 The forecast for the fourth quarters sales (units), Q4, in 2001, assuming the trend
pattern continues, is closest to
A 1,300 B 2,300 C 3,800 D 5,200
1.21 The staff in the Complaints Department of an airline are available to answer the
telephone at random times, which amount to 20% of the working day on average.
The probability that a customers call is answered for the first time, on their fifth attempt is
5 4 4
A (02) B (02) (08) C (08) (02) D 1

The next four sub-questions, 1.22 1.25, are based on the following table of data.
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
Totals 1,600 1,400 1,200 1,000
1.22 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 008 B 025 C 031 D 056
1.23 The probability that a randomly-selected Brand X buyer is from the West or under 25
years of age is (to 2 decimal places)
A 008 B 048 C 056 D none of these.
1.24 The probability that a randomly-selected Brand X buyer, who is under 25 years of age,
is from the South is (to 3 decimal places)
1.25 The probability that two randomly-selected Brand X buyers are both under 25 years of
age is (to 2 decimal places)
(Total = 50 marks)

SECTION B 50 MARKS
ANSWER TWO QUESTIONS ONLY
Question Two
A factory's monthly production costs and output from a production line for circuit boards are as
follows:
Jan Feb Mar April May June July Aug Sept Oct
Output X (units) 200 150 400 450 50 500 150 350 100 250
Costs Y (000) 10 9 12 14 5 16 10 14 6 10
X = 2,600 Y = 106 X = 895,000 Y = 1,234 XY = 32,200
Required:
(a) (i) Draw on graph paper a scatter diagram of costs against output.
[Do not draw in your "line of best fit".]
(6 marks)
(ii) Comment on your diagram.
(2 marks)
(b) (i) Calculate the least-squares regression of costs on output and plot this line on the
diagram.
(6 marks)
(ii) Explain the meaning of your regression line.
(3 marks)
(c) Estimate approximate values for the correlation coefficient, and r-squared, and explain their
meanings.
[Do not calculate the value of r.]
(3 marks)
(d) The planned output of the factory for November is 300 circuit boards.
(i) Forecast the costs for November.
(2 marks)
(ii) Discuss the reliability of your forecast.
(3 marks)
(Total = 25 marks)

Question Three
The Technical Support department of a software company has received the following number of
telephone enquiries each day to its Help Line over the last (typical) fifty days:
15 7 11 25 9 23 8 19 12 27
8 13 2 14 16 20 8 11 8 19
13 34 6 18 26 6 14 17 12 6
9 5 21 7 18 11 3 33 0 14
24 9 18 29 9 20 7 5 9 22
Required:
(a) Tabulate these data as a frequency distribution, using seven class intervals of equal width.
(7 marks)
(b) Plot an ogive (a "less than" cumulative frequency curve) for your distribution on graph
paper, and clearly label the positions (locations) of the median and the quartiles.
(8 marks)
(c) From the graph, estimate the numerical values of the median and the quartiles in (b) and
briefly explain their meaning.
(6 marks)
(d) The cost of the Help Line service to the Technical Support department is 5 each call.
Assume there are 300 working days in the year.
Calculate an estimate of the annual cost of the Help Line, and comment on the reliability of
your estimate.
(4 marks)
(Total = 25 marks)

Question Four
(a) A company needs to have a cash balance of 500,000 in exactly three years from now. It
plans to achieve this by putting 12 equal quarterly sums into a Fund. The first sum will be
deposited in three months from now. The Fund attracts compound interest of 25% each
quarter.
[Formulae are provided on page 19.]
Required:
(i) Calculate the size of the quarterly sum required for the Fund.
(8 marks)
(ii) Demonstrate simply why your answer is reasonable.
(2 marks)
(b) A company is considering the purchase of one of two machines, A or B, for 180,000. The
terms of payment for each machine are 90,000 on delivery and 90,000 a year later. The
machines are expected to produce year-end net cash flows as follows:
Time (end of year) 1 2 3 4 5
Net cash flow of A (000) 60 50 40 30 20
Net cash flow of B (000) 40 40 40 40 40
At the end of year 5, either machine would be sold for 20,000. The annual cost of capital
is 9% for each year.
Required:
(i) Calculate the net present value of each machine.
(12 marks)
(ii) Recommend which machine should be purchased, and explain why.
(3 marks)
(Total = 25 marks)
End of paper

Examination
Question and
Answer Book
Write here your full examination number
Centre Code:
Hall Code:
Desk Number:
3c FBSM
20 May 2002
THIS QUESTION PAPER BOOKLET IS ALSO YOUR ANSWER BOOKLET.

Sufficient space has been provided for you to write your answers and also for workings where questions
require them. For section B questions, you must write your answers in the shaded space provided.
Additional blank sheets (pages 18-20) are included if you require more space for notes or workings.
Please note that you will NOT receive marks for your notes or workings. Do NOT remove any sheets from
this booklet: cross through neatly any work that is not to be marked. Avoid the use of correction fluid.
You are allowed two hours to answer this question paper. All questions are compulsory.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2-11)
Answer the THREE questions in section B (these are on pages 12-17)
Maths Tables and Formulae are provided on pages 21-26
You are advised to spend 10 minutes reading through the paper before starting to answer the questions.
You should spend no more than 55 minutes on answering the ONE question in section A, which has 25
sub-questions.
You should spend no more than 55 minutes on answering the THREE questions in section B.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leave
the examination hall with this booklet.
Do NOT write your name or your student registration number anywhere on this booklet.
TURN OVER
For office use only Total One Two Three Four
Marks awarded (First marker) for each question

Marks awarded (Second marker) for each question

SECTION A 50 MARKS
answer.
REQUIRED:
Place a circle O around the letter A, B, C or D that gives the correct answer to each sub-question.
If you wish to change your mind about an answer, block out your first answer completely and then circle
another letter. You will NOT receive marks if more than one letter is circled.
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient space
has been provided for you to do your workings where these sub-questions require them.
Question One
1.1 An index number increases each year by 10% of its value in the previous year. If its value in 1999 was
120, its value in 2002 is closest to
A 150. B 156. C 160. D 162.
Space for workings to 1.1
1.2 In a time series of the unit sales of shoes, random variation could be caused by
A a general trend.
B seasonal effects due to the weather.
C cyclical effects resulting from a change in fashion.
D unexplained or freak events.
For office use only Total 1.1 1.2

Marks awarded (First marker) for each sub-question
Marks awarded (Second marker) for each sub-question
FBSM 2 May 2002

1.3 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.
1.4 Which ONE of the following describes a qualitative variable?
A The number of invoices selected for an internal audit.
B The number of errors discovered in batches of invoices.
C The $ value of the error made in invoices in a batch.
D The type of error made in invoices.
1.5 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.
TURN OVER
For office use only Total 1.3 1.4 1.5

May 2002 3 FBSM

1.6 An accountant has marked some performance criteria out of 20 and found the mean to be 10 marks
and the standard deviation to be 2 marks. The marks now have to be expressed as a percentage.
What would be the new value of the standard deviation?
A 10% B 20% C 10% D 20%
1.7 An index number is made up of two items, food and non-food.
Sub-group Weight Index

Non-food 7 130
Food 3 ?
All items 10 127
The index number for the sub-group Food is closest to
A 120. B 122. C 124. D 126.
1.8 The diagram below shows an ogive (cumulative frequency) for a sample of 400 items.
400
300
Cumulative
frequency
0 X
K
The point K on the X-axis represents the value
A which 75% of the sample take.
B below which 75% of the sample values lie.
C which 25% of the sample take.
D above which 75% of the sample values lie.

FBSM 4 May 2002

1.9
Sample 1: 2, 5, 5, 12
Sample 2: 1, 3, 5, 8, 8
Which of the following statistics has the same value in both samples?
A Arithmetic mean B Standard deviation C Median D Mode
1.10 A companys 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%.
1.11 Y
8 x
x x
6 x x
x x
4 x xx
x x
2 xx
x x
0 4 8 12 X
On the basis of the scatter diagram above, which of the following equations would best represent the
regression line of Y on X?
A Y = X + 8 B Y=X+8 C Y=X8 D Y = X 8
TURN OVER
May 2002 5 FBSM

1.12 A sample of 10% of CIMA students is required. Which ONE of the following methods would provide
the best simple random sample?
A Select every tenth CIMA student to arrive at their college/institute on one specific day.
B Select randomly, using random number tables, one in ten of every CIMA class.
C Select 10% of colleges/institutions providing CIMA courses, then from these choose all students who
are registered with CIMA.
D Select 10% of all students registered with CIMA, giving each a chance of 01 of being picked.
1.13 Two groups of stock, K and L, are valued. The first group, K, is valued at 10,000 5% and the
second group, L, is valued at 20,000 10%.
The maximum percentage error in the combined (K + L) stock valuation of 30,000 is closest to
A 75%. B 83%. C 100%. D 150%.
1.14 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

FBSM 6 May 2002

1.15 In a single throw of a pair of fair (six-sided) dice, what is the probability that the result is two numbers
which sum to 7?
A 1 B 1 C 1 D 1
12 6 4 2
The following data should be used for 1.16 and 1.17

In an internal audit of 200 invoices, the following numbers of errors were discovered:
Number of errors: 0 1 2 3 4 5 6 or more
Number of invoices: 60 30 40 40 20 10 0
1.16 The percentage of invoices with errors is
A 30%. B 70%. C 80%. D none of these.
1.17 The expected value of the number of errors per invoice is
A 18 B 2 C 21 D 3
TURN OVER

May 2002 7 FBSM

1.18 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 025%. B 4%. C 25%. D 400%.
1.19 The following formula is used in the financial analysis of dividends:
V
R = +G
P
When the formula is rearranged, with P in terms of the other variables, P is equal to
R (R G) V V
A G B
V C G
D
(R G)
V R

FBSM 8 May 2002

1.20 The length of telephone calls to a Software Support line is approximately Normally distributed with a
mean of 20 minutes and a standard deviation of 5 minutes.
The percentage of calls lasting under 30 minutes is closest to
A 2%. B 48%. C 83%. D 98%.
1.21 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.

TURN OVER
May 2002 9 FBSM

1.22 A companys security system is made up of three separate electronic alarms, which operate
independently. The security system operates provided that at least one of the three alarms is working.
The probability of an alarm failing at any time is 1 in 100.
The probability of the security system failing is
A 1 in 100. B 3 in 100. C 1 in 10,000. D 1 in 1,000,000.
1.23 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 (310) x 300 x 3 B (710) x 300 C (1011)3

x 300 D (1110)3
x 400

FBSM 10 May 2002

1.24 A manufacturer supplies components in boxes of 10, stating that there is a (independent) chance of
10% of any one component being faulty.
In a large batch, the percentage of boxes containing no faulty components will be closest to
A 10%. B 35%. C 50%. D 90%.
1.25 A new lake is to be stocked with fish, according to the numbers in the table below.
Type of fish A B C D
Number of fish 400 300 200 100
Annual % increase 10 20 30 40
After one year, the percentage of fish of Type D in the lake will be closest to
A 10%. B 12%. C 14%. D 20%.
(Total = 50 Marks)
End of Section A
Section B starts overleaf
TURN OVER

May 2002 11 FBSM

SECTION B 50 MARKS
ANSWER ALL THREE QUESTIONS
IMPORTANT
MARKS ARE AWARDED FOR CORRECTLY COMPLETING THE SHADED BOXES WITH THE
CORRECT ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
THERE ARE NO MARKS FOR COMPLETING THE MISSING FIGURES WHERE NO MARK IS
INDICATED, BUT COMPLETING THESE WILL HELP YOU OBTAIN THE CORRECT ANSWERS.
DO NOT WRITE IN THE MARGINS NOR IN THE COLUMNS FOR USE BY MARKERS.
Question Two
In two years from now, some equipment in your company will need replacing. You estimate that 400,000 in
cash, then, will be required to do this. Your company has three alternative options for achieving this sum.
The rate of interest will be 35% per quarter over the next 2 years, in all three options. Interest will be
compounded every quarter.
Option (1) Invest X now, so that the investment grows to 400,000 in two years.
Option (2) Put 25,000 into a Reserve Fund (RF1) every quarter, starting now (that is, 9 deposits are
made), and borrow the shortfall (the amount by which the Reserve Fund (RF1) falls short of its
target of 400,000).
Option (3) Put Y into a Reserve Fund (RF2) at the end of every quarter for two years, to achieve the
target of 400,000 exactly.
A geometric series of n terms, with first term A and common ratio R, is denoted by:
2 3 4 n-1
A + AR + AR + AR + AR + + AR .
Do not write in these
A (R n 1) columns below
The sum of this series is given by: Sn =
(R 1)
Required For use For use

by the by the
Write your answers in the shaded boxes below Marks second first
available marker marker
(a) Calculate the value of X, to the nearest . 2
(b) Calculate the effective annual rate of interest, to 2
decimal places. 2
(c) Calculate the amount of money that will be in the 4
Reserve Fund (RF1) after 2 years, to the nearest .
(d) Calculate the discount factor that you would use to 1
find the present value of the shortfall in the Reserve
Fund (RF1) to 4 decimal places.
(e) Calculate the present value of the shortfall in the 2
Reserve Fund (RF1) implied by your answer to part
(c), to the nearest 100.
(f) Calculate the value of Y, for the Reserve Fund 4
(RF2), to the nearest .
sub-total:
15
Part (g) of Question Two is on page 13

FBSM 12 May 2002

Question Two continued
columns below
For use For use

by the by the
Required Marks second first
Explain, in no more than 20 words, (in the shaded area below) the
(g) meaning of the term present value.
2
Sub-total:
2
Space for workings and/or notes for Question Two
Total for Question Two = 17 Marks
TURN OVER
May 2002 13 FBSM

Question Three
The unit sales of a toy for the last nine quarters are given below:
Year 2000 2001 2002

Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Unit sales 45 170 200 130 85 205 235 170 120
The (moving-average) trend in unit sales is approximately linear and described by the equation
Sales = 110 + 10T
where T = 1 denotes the first quarter, Q1, of 2000, T = 2 denotes the second quarter, Q2, of 2000, and so on.
The unit sales of the toy over the last few years have been analysed in two different ways: firstly, using the
additive model and, secondly, using the multiplicative model. The average seasonal variations for the two
models are as follows:
Quarter Q1 Q2 Q3 Q4
Additive model (units) -80 +40 +60 -20
Multiplicative model -40% +20% +30% -10%
The underlying business conditions are not expected to change during the Do not write in these
next two quarters. columns below

by the by the
(a) Calculate the percentage increase in the total annual
sales between 2000 and 2001, to 1 decimal place. 1
(b) Predict the trend value for the second quarter,Q2, of
2002. 1
Sub-total:
2
Space for workings and/or notes for Question Three
Parts (c) to (f) of Question Three are on page 15

FBSM 14 May 2002

Question Three continued
columns below

by the by the
Marks second first
Write your answers in the shaded boxes below marker marker
available
(c) Using the additive model, calculate the forecasts for 1
the second quarter, Q2, of 2002; AND
the third quarter, Q3, of 2002. 1
sub-total:
2
(d) Using the multiplicative model, calculate the forecasts 2
for the second quarter, Q2, of 2002; AND
the third quarter, Q3, of 2002. 2
sub-total:
4
(e) Based on the sales information given, identify three features of the
unit sales of this toy in no more than 20 words each (in the shaded
areas below).
1
2
Sub-total:
6
(f) Explain when it is appropriate to use a multiplicative model for
forecasting in no more than 30 words (in the shaded area below).
2
Sub-total:
14
Total for Question Three = 16 Marks

TURN OVER
May 2002 15 FBSM

Question Four
The mail-order sales (units) of Brand X in a certain country are shown below. In this country, the populations
of all the twenty sub-groups are equal. Each customer buys one unit. Ages are given in years.
Mail-order sales of Brand X (units) by region and age in 2001

Region\Age 21 29 30 39 40 49 50 59 60 + Total
North 100 80 50 40 30 300
South 55 50 45 30 20 200
East 65 60 65 60 50 300
West 20 30 40 50 60 200
Space for workings and/or notes for Question Four

columns below
Required: For use For use

by the by the
(a) Calculate the arithmetic mean sales per sub-group 1
(b) Calculate the median sales per sub-group 1
(c) A customer is to be randomly selected for a holiday
prize. What is the probability that this customer is
from the East and over 39 years of age? 2
(d) A customer is to be randomly selected for a cash
prize. Assuming that the winning of two prizes is
allowed, what is the probability that this customer is
from the North or under 40 years of age? 2
sub-total:
6
Parts (e) to (h) of Question Four are on page 17
FBSM 16 May 2002

Question Four continued
columns below

by the by the
(e) Without calculation, state the region with the largest standard
deviation in sales (across age groups) and give a reason for your
answer in no more than 20 words.
2
(f) For the North and South, what is the rank correlation
coefficient between sales and age? 2
(g) A chain-base index number system for total sales

was introduced in 1999 with a base figure of 100. If
total sales have increased by 10% each year since
then, what is the chain-base index number for total
sales in 2001 (2000 = 100)? 1
(h) Identify three features shown by the sales data in the table in no more
than 20 words each (in the shaded areas below).
1
2
Sub-total:
11
Total for Question Four = 17 Marks
End of Question Paper

Maths Tables and Formulae are on pages 21 - 26
TURN OVER FOR ADDITIONAL SPACE FOR NOTES AND WORKINGS
May 2002 17 FBSM

You may use this sheet for workings
(no marks are awarded for workings)
FBSM 18 May 2002

May 2002 19 FBSM

FBSM 20 May 2002

May 2002 21 FBSM

FBSM 22 May 2002

May 2002 23 FBSM

FBSM 24 May 2002

May 2002 25 FBSM

FBSM 26 May 2002

DO NOT WRITE ON THIS SHEET
May 2002 27 FBSM

3c
FBSM
Business Mathematics
FBSM 28 May 2002

Examination
Question and Answer
Book
3c FBSM
18 November 2002

Sufficient space has been provided for you to write your answers, and also for workings where questions require
them. For section B questions, you must write your answers in the shaded space provided. Additional blank
sheets (pages 16 19) are included if you require more space for notes or workings. Please note that you will
NOT receive marks for your notes or workings. Do NOT remove any sheets from this booklet: cross through neatly
any work that is not to be marked. Avoid the use of correction fluid.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2 9).
Answer the THREE questions in section B (these are on pages 10 15).
Maths Tables and Formulae wee provided within the question paper and are available elsewhere on the website.
You should spend no more than 55 minutes on answering the ONE question in section A, which has 25 sub-
questions.
Hand this entire booklet to the invigilators at the end of the examination. You are NOT permitted to leave the
examination hall with this booklet.

SECTION A 50 MARKS
Each of the sub-questions numbered from 1.1 to 1.25 inclusive, given below, has only ONE correct answer.
REQUIRED:
Please note that you will NOT receive marks for any workings to these sub-questions. Sufficient space has
been provided for you to do your workings where these sub-questions require them.
Question One
1.1 a 2x
The expression simplifies to
a 2y
A a2x/y B a(x-y)/2 C a2(x-y) D a2(x+y)
1.2 QH DS
=
2 Q
The formula above can be re-arranged so that Q equals

2 2
H 2DS H 2DS
A B C D
2DS H 2DS H
1.3 The total profit, P, of an organisation is related to output (x units) by the expression:
P = 40 + 11x 2x2
The organisation will break even (that is, P = 0) with an output of
A 25 units. B 4 units. C 55 units. D 8 units.
Space for workings for sub-questions 1.1 to 1.3

1.4 3x + 2y = 6
x 2y = 2
The solution, in the form (x,y), to the above simultaneous equations is
A (0,3) B (2,3) C (2,0) D (3,2)
Space for workings for sub-question 1.4

The following time series represents the weekly sales (000) of a particular product:
Week Sales
000
1 200
2 240
3 250
4 220
5 230
6 260
1.5 The 2nd four-point centred moving average for the sales data will be
1.6 Assuming an additive model, and based on the information given, the seasonally-adjusted sales figure
(000) for week 4 will be
A 2375 B 2225 C 2200 D 2025
Space for workings for sub-questions 1.5 and 1.6

The numbers of houses sold by an estate agent in the last 8 weeks were:
4, 3, 2, 0, 0, 10, 1, 4
1.7 The median number of houses sold per week was
A 0 B 25 C 30 D 50
1.8 The arithmetic mean number of houses sold per week was
A 0 B 25 C 30 D 50
1.9 The following information shows the daily sales revenue (000) of a company producing a particular
item of clothing, over a period of two years:
Sales Frequency
000 %
0 to under 10 5
10 to under 20 20
20 to under 30 60
30 to under 40 10
40 to under 50 5
The expected daily sales (in 000) is

1.10 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)
1.11 In order to carry out a survey into the spending habits of the population living in a certain region of the
United Kingdom, a sample of individuals is to be selected. The population can be categorised
according to age group ("under 18", "18 to under 30", "30 to under 60", "60 and above"). The sample
will consist of 05% of the membership of each age group. This method of sampling is an example of
A stratified. B quota. C systematic. D random.
1.12 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:
X = 1 Y = 15 X2 = 15 Y2 = 65 XY = 7
The correlation coefficient is nearest to
A 022 B 047 C 090 D - 032

The following table shows the index of prices (1995 = 100) for a certain commodity over the
period 1995 2000:
1995 1996 1997 1998 1999 2000

100 105 115 127 140 152
1.13 The percentage increase in the price between 1997 and 1999 is nearest to
1.14 It has been decided to rebase the index so that 1998 = 100. The index for 2000 will now be nearest to
A 1931 B 1394 C 1250 D 1197

The following data should be used for 1.15 to 1.17
The total overtime cost of a small company varies from week to week, and is found to be
Normally distributed with a mean of 800 and a standard deviation of 200.
1.15 In any given week, the probability that the overtime cost will exceed 1,000 is
1.16 In any given week, the probability that the overtime cost will be between 700 and 900 is
1.17 In 10% of weeks, the overtime cost will approximately fall below
A 366 B 455 C 544 D 633

2,000 is invested in a bank account. The account earns compound interest at 5% per year.
1.18 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
1.19 The investment will have almost doubled in value after
A 11 years. B 12 years. C 13 years. D 14 years.
1.20 An individual who expects to retire in five years' time, estimates that his company pension will be
15,000 per year. Each year's pension will be paid as a lump sum at the end of the year. If current
interest rates are 6%, then the present value of the first year's pension, to the nearest 5, will be
A 10,575 B 10,975 C 11,190 D 11,205
1.21 A credit card company states that its nominal annual interest rate is 18%. If interest is charged
monthly at 15%, then the annual percentage rate (APR), correct to 2 decimal places, will be
A 1956%. B 1925%. C 1881%. D none of these.

The following data should be used for 1.22 to 1.25
Two components, A and B, operate independently as part of a computer system. The probabilities
that A and B will work correctly are 09 and 08 respectively.
1.22 The probability that both components will work correctly is
A 081 B 072 C 028 D 017
1.23 The probability that both components will not work correctly is
1.24 The probability that only one component will work correctly is
A 098 B 081 C 074 D 026
1.25 The probability that at least one component will work correctly is
Total = 50 Marks

SECTION B 50 MARKS
IMPORTANT
MARKS ARE AWARDED FOR CORRECTLY COMPLETING THE SHADED BOXES WITH THE
CORRECT ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
ADDITIONAL SPACE FOR WORKINGS OR NOTES IS AVAILABLE ON PAGES 16 19.
Question Two
At the close of business on the last working day of each month, the Manager of a branch of a bank
requires his staff to produce a brief summary of the account balances. These monthly figures are
intended to form the basis of the Manager's quarterly report which is then used by the head office for
planning purposes. To provide this information, the accounts of a randomly selected sample of 100
customers are examined. The details for one month are shown in the table below.
Class Class
Account balance
mid-point frequency fx fx2
000
x f
0 to less than 2 1 10
2 to less than 4 3 40 A B
4 to less than 6 5 30
6 to 8 7 20
Total () 100 420 2,100

Required: columns below
For use For use
Write your answers in the shaded boxes below: Marks
by first by second
available
marker marker
(a) Fill in the appropriate numerical value as indicated by the letters in the
table above:
A 2
B 2
(b) The arithmetic mean of the account balances is 2
(c) The standard deviation of the account balances is 2

sub-total:
8
Space for workings

(d) Answer the questions below: Marks
For use For use
by first by second
available
marker marker
(i) From the data given in the table on the previous page, construct a
cumulative "less than" frequency ogive.
Summary of the end-of-day account balances
100
90
80
Cumulative Frequency
70
60
50
40 2
30
20
10
0
0 2 2 4 4 6 6 8 8
Account balance (000)
(ii) The median of the account balances is 2
(iii) The semi-interquartile range of the account 2

balances is
(e) Giving your reasons, explain whether the mean and standard deviation,
or the median and semi-interquartile range, would be the most
appropriate summary measures for this set of data.
(Do not exceed 50 words)
sub-total:
9
Total Marks for Question Two = 17
Space for workings (additional space for workings is available on pages 16 19)

Question Three
The Production Manager of a large manufacturing company is concerned about the apparent increasing
maintenance costs of the production machinery. There is a feeling that there may be a relationship
between the ages of the individual machines and their annual maintenance costs.
In order to examine this theory in more detail, the following information has been collected for a
randomly selected sample of 8 machines currently in operation:
Machine A B C D E F G H
Age in years (X) 2 5 8 2 3 7 4 10
Maintenance costs (000) (Y) 3 8 12 5 7 10 8 13
X = 41 Y = 66 X2 = 271 Y2 = 624 XY = 405

columns below
Required: Marks
For use For use
by first by second
available
marker marker
(a) Plot a scatter diagram of the above data.
Scatter Diagram
14
13
Maintenance costs (000)
12
11
10
9
8
7
6
5 2
4
3
2
1
0
0 1 2 3 4 5 6 7 8 9 10 11
Age (years)
Required: Write your answers in the shaded boxes below:

(b) Describe two important features that are evident from the scatter
diagram. (Do not exceed 20 words for each.)
(i)
(ii)
sub-total:
4

Write your answers in the shaded boxes below: For use For use
Marks
by first by second
available
marker marker
(c) Calculate the least-squares regression line of maintenance costs

(000) on machine age (years) in the form Y = a + bX.
a= 3
b= 2
(d) In relation to this particular situation, explain the meanings of a and b in

the formula above. (Do not exceed 20 words each.)
a:
b:
(e) A similar sample, in terms of age range of machines, was selected at

one of the company's other factories, yielding the least-squares
regression line:
Y = 3 + 15X
(i) Forecast the annual maintenance costs that would be

2
expected for a 12-year old machine.
(ii) Comment on the reliability of your forecast. (Do not exceed 30 words.)
sub-total:
13
Total Marks for Question Three = 17
Space for workings (additional space for workings is available on pages 16 19)

Question Four
(a) A company borrowed 50,000 to buy some new equipment. Interest on this loan is compounded
annually at 9%. The company is required to pay off the loan by making a single payment after five
years.
In order to have the cash available to make this payment, it has decided that annual payments will be
made into a sinking fund that compounds interest annually at 5%. The first payment into the fund will be
made one year after the loan was taken out, and the last payment will be made on the day the loan is
repaid.
The table below shows how the debt and sinking fund will grow during the five years:
LOAN SINKING FUND

Interest Outstanding Interest Payment Amount in fund
Year end
charged () debt () earned () () ()
1 0 13,92261 13,92261
2 A D
3
4 C
5 B

For use For use
Marks
Write your answers in the shaded boxes below: available
by first by second
marker marker
Calculate the appropriate numerical value to go in the space indicated
by the letters in the table above:
A 2
B 2
C 3
D 3
sub-total:
10
Space for workings for question four (a)

(b) The Manager of a sports centre has forecast that the sports centre will need 80,000 in
cash in four years' time so that it can buy some new equipment. In order to have the necessary
cash available at that date, the Manager has decided to put X every quarter into a sinking fund.
The payments will start immediately (and therefore 17 payments will be made). Interest on the
fund will be compounded at 35% per quarter.
Required: Do not write in these

columns below
For use For use
Write your answers in the shaded box below. Marks
by first by second
available
marker marker
(i) Calculate the value of X (that is, the quarterly 4

payment into the fund).
(ii) What is the present value of the 80,000 (assuming an 2

interest rate of 35% per quarter)?
sub-total:
6
Total Marks for Question Four = 16
Note: A geometric series of n terms, with first term A and common ratio R, is denoted by:
A + AR + AR2 + AR3 + + ARn 1
n
A(R 1)
The sum of this series is given by: Sn =
(R 1)
Space for workings for question four (b)

Examination
Question and
Answer Book
Write here your full examination number
Centre Code:
Hall Code:
Desk Number:
3c FBSM
19 May 2003
Monday late afternoon

require them. For section B questions, you must write your answers in the shaded space provided. Please
note that you will NOT receive marks for your notes or workings. Do not exceed the stated number of
words. Do NOT remove any sheets from this booklet: cross through neatly any work that is not to be
marked. Avoid the use of correction fluid.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2-13)
Answer the THREE questions in section B (these are on pages 14-20)
Maths Tables and Formulae were provided with the printed question paper, and are available elsewhere
on the website
sub-questions.

SECTION A 50 MARKS
answer.
REQUIRED:
Question One
The following information is required for sub-questions 1.1 and 1.2

The Economic Order Quantity (EOQ) for a particular stock item is given by the expression:
2C oD
EOQ =
Ch
1.1 If Co = 2 per order, D = 1,000 items and Ch = 025 per item, then EOQ (rounded to the nearest
whole number) will be
A 400 B 320 C 160 D 126
1.2 If, for a different stock item, EOQ = 200 items, Co = 4 per order and D = 1,000 items, then Ch (in per
item) will be
A 005 B 010 C 015 D 020
FBSM 2 May 2003

1.3 If the demand for a particular product is x (hundred units per week), then the weekly profit (P) is
given by the expression
2
P = 30 + 4x 2x
The break-even demand (that is when P = 0) will be
A 500 units per week.
B 400 units per week.
C 300 units per week.
D 200 units per week.
1.4 The production costs per unit of a certain commodity are 20 ( 2) and the selling price per unit is
35 ( 3). In any given week, the sales are 90 ( 10) units. On the basis of this information, the
maximum profit per week is
A 1,000 B 1,600 C 1,800 D 2,000

On a particular day, a companys finance department received 20 invoices, of which 3 contained
errors.
1.5 If two of the invoices are selected at random, then the probability (correct to 2 decimal places) that
neither of them will contain an error is
A 072 B 063 C 042 D 040
1.6 If two of the invoices are selected at random, then the probability (correct to 2 decimal places) that at
least one of them will contain an error is
A 060 B 058 C 036 D 028
May 2003 3 FBSM

The following frequency distribution shows the number of days of absence due to sickness, during the
last year, of a randomly selected sample of 50 employees of a large manufacturing company.
Days of absence Number of employees

02 15
35 10
69 9
10 12 8
13 15 6
More than 15 2
1.7 The median number of days of absence due to sickness per employee will be nearest to
A 3 days. B 4 days. C 5 days. D 6 days.
1.8 If the upper quartile is 11 days, and the lower quartile is 1 day, then the quartile deviation will be
A 12 days. B 10 days. C 6 days. D 5 days.
1.9 In the current financial year, an employees net income is 15,360, after total deductions of 40% from
her gross income. In the last financial year, her gross income was 23,400. In percentage terms, the
increase in her gross income is
A 94% B 86% C 75% D 67%
1.10 The following table of index numbers shows how the production of a particular model of motorboat at a
boat builders has changed over the period August 2002 to February 2003, with January 2002 = 100:
Aug Sep Oct Nov Dec Jan Feb

Production index 110 119 115 108 102 98 95
If the actual production figure for August was 140 motorboats, then the number of motorboats produced in
February 2003 was closest to
A 105 B 121 C 133 D 162
FBSM 4 May 2003

1.11 The following table shows the price of a certain commodity over the years 1998 to 2001:
Year 1998 1999 2000 2001

Price() 270 311 342 383
If a chain-based index is used, the price index number for 2000 will be closest to
A 110 B 117 C 120 D 127
1.12 A broker has estimated the profits or losses for a particular investment and their respective
probabilities as follows:
Profit(000) -1 1 3 5
Probability 01 03 04 02
The expected profit (000) on this investment will be
A 21 B 22 C 23 D 24
1.13 The Personnel Department of a large manufacturing company wishes to measure the correlation
between the performance of its employees on an aptitude test, and their ability to carry out a specific
work-related task.
The following table shows the rankings of 7 employees at both the test and the task:
Employee A B C D E F G
Test Rank 2 5 7 4 1 6 3
Task Rank 2 6 7 4 3 5 1
Spearmans rank correlation coefficient for this data is
A 062 B 072 C 082 D 092
May 2003 5 FBSM

A company uses regression analysis to examine the relationship between its total weekly costs (C)
and its weekly production level (P units). The following model was found to be a suitable description of
this relationship:
C = 1500 + 300P
1.14 If, in a particular week, the production level is 500 units, then the predicted costs will be
A 150,000 B 150,300 C 151,000 D 151,500
1.15 The average variable cost per unit is estimated as
A 300 B 1,500 C 1,800 D 3,030
1.16 A graphical presentation of classified data in which the number of items in each class is represented
by the area of the bar is called
A an ogive.
B a histogram.
C a bar chart.
D a compound bar chart.
1.17 A pie chart is to be drawn to represent the following data, which shows the breakdown by department
of the number of employees working on a particular project:
Department Number of Employees
Marketing 7
Finance 5
Personnel 8
Sales 10
The angle of the sector (slice), in degrees, of the pie chart representing Finance will be
A 30 B 45 C 60 D 90
1.18 A survey is to be carried out into the spending habits of the population of a large town in the North
East of England. It has been decided that five small areas are to be randomly chosen, two close to the
town centre and three in more outlying areas. In these areas, ten interviewers are each required to
interview a randomly selected sample of 30 people.
This system of sampling is an example of
A multi stage. B cluster. C quota. D stratified.
FBSM 6 May 2003

1.19 On one particular checkout in a supermarket, the service times in minutes of five customers were:
3, 2, 1, 5, 4
The standard deviation of these service times, correct to 1 decimal place, is closest to
A 35 minutes B 20 minutes C 15 minutes D 10 minutes
1.20 At a second checkout in the same supermarket as in sub-question 1.19, 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%
1.21 The underlying trend in the demand for a particular product is constant (flat), and is subject to
quarterly seasonal variations as follows:
Quarter Q1 Q2 Q3 Q4
Seasonality +50% +50% -50% -50%
Assume a multiplicative model is appropriate.
If the demand for the last quarter, Q2, was 240 units, then the forecasted demand for the next quarter, Q3, is
A 80 units. B 100 units. C 120 units. D 140 units.
1.22 A bank offers investors a nominal annual interest rate of 4% with interest paid quarterly.
The effective annual rate of interest is
A 406% B 404% C 402% D 401%
1.23 If 10,000 is invested now, at an interest rate of 6% compounded annually, then after 5 years the
value of the investment will be closest to
A 13,226 B 13,382 C 13,562 D 13,598
May 2003 7 FBSM

1.24 A company pays rent of 50,000, annually in advance, on a building for a period of 5 years. The
annual interest rate is 10%. The total present value of the rental repayments will be closest to
A 212,650 B 210,800 C 208,500 D 189,550
1.25 An annuity requires the deposit of 100 per year for 5 years. The deposits are made at the beginning
of each year and earn interest at 8% per year. At the end of the 5 years, the investment will be worth
closest to
A 633 B 645 C 654 D 660
(Total = 50 Marks)
End of Section A
FBSM 8 May 2003

SECTION B 50 MARKS
IMPORTANT
MARKS ARE AWARDED FOR COMPLETING THE SHADED BOXES WITH THE CORRECT
ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
Question Two
As part of its expansion plans, a large financial services organisation is examining the feasibility of updating
and expanding its IT facilities. One proposal is the purchase of a new server costing 7,500. This would
reduce the operating costs over the next five years as shown below:
End of year 1 2 3 4 5
Net cash savings 1,000 2,000 3,000 3,000 2,000
It is anticipated that the cost of capital to the organisation will be 10% per year over this period.

columns below

by the by the
(a) Complete the table by calculating the appropriate numerical values

for the spaces indicated by the letters A-E:
Net cash flow Discount factor Present value
Year end
Now (7,500)
1 1,000 A B 1 each
2 2,000
3 3,000
4 3,000
1
1 /2
5 2,000 C D
each
Net Present Value E 2
sub-total: 7
May 2003 9 FBSM


columns below
For use For use

Required: by the by the
Marks second first
(b) Explain, in the shaded area below, what is meant by the term
internal rate of return (IRR).
Maximum of 20 words 3
(c) Calculate the approximate internal rate of return (IRR) of the above
project, correct to the nearest whole percentage point.
4
(d) On the basis of your calculations, explain, in the shaded area below,
whether or not you would recommend the purchase of the server.
FBSM 10 May 2003

Question Three
A large manufacturing company, with factories throughout Europe, employs a large force of travelling
salespeople. Records show that for salespeople in the UK, the weekly distance travelled per person is
approximately Normally distributed with a mean of 1,000 kilometres and a standard deviation of
300 kilometres.
The companys Head of Marketing and Sales thinks that salespeople who
travel more than 750 kilometres per week should be eligible for a luxury Do not write in these
company car. columns below

by the by the
Write your answers in the shaded areas below Marks second first
(a) The stages in the calculation of the probability that a particular
salesperson in the UK is eligible for a luxury car are shown below.
You are required to state the numerical values indicated by the letters
A, B and C. Give your answers correct to 2 decimal places.
(Note: Z denotes the standard normal variable)
P (salesperson is eligible for a luxury car)
= P (weekly distance travelled > A) A 1

= P (Z > B) B 2
=C C 3
(b) The company intends to introduce an incentive scheme in the UK
which would give an additional payment of 1,000 to each of the
10% of salespeople who travel the greatest distances.
Calculate the numerical values indicated by the letters in the following
calculations, giving your answers correct to 2 decimal places.
From the Normal Tables, the Z-value, which is exceeded by 10% of
Normal values, is D . 2
Salespeople travelling more than E kilometres 3

per week should be paid the additional 1,000.
(c) In France, where 200 salespeople are employed, the mean distance
travelled is 1,000 kilometres per week, but there is less variability in
the weekly distances. The standard deviation is estimated as 200
kilometres.
Calculate the number of salespeople in France who travel
(i) less than 1,250 kilometres per week
2
(ii) between 750 kilometres and 1,250 kilometres per week
May 2003 11 FBSM

Question Four
A newspaper publisher is promoting the sales of a new local daily newspaper. The following table shows the
daily sales of the newspaper over a recent three-week period:
Day Sales
(00s)
Monday 27
Tuesday 41
Wednesday 45
Thursday 53
Friday 65
Monday 30
Tuesday 42
Wednesday 50
Thursday 57
Friday 66
Monday 34
Tuesday 48
Wednesday 53
Thursday 59
Friday 72 columns below
For use For use

Marks second first
(a) Plot the above time series data using the following axes:
Sales of newspaper
80
70
60
50
Sales,
00s 40
per day 30
20
10
0
M T W Th F M T W Th F M T W Th F
Day 2
FBSM 12 May 2003

columns below
For use For use

(b) State two features of the time series shown by the graph.
(1)
(2)
(c) The following table shows the stages in the calculation of the 5-day
moving average trend line. State which values would arise at A, B
and C.
* indicates the cell is blank
5-day
Sales
5-day moving Trend
Day (00s)
moving total average (Y T)
(Y)
(T)
Monday 27
Tuesday 41
Wednesday 45 A * * 2
Thursday 53 234 4680 620
Friday 65 235 4700 1800
Monday 30 240 4800 -1800
Tuesday 42 244 4880 -6.80
Wednesday 50 245 4900 100
Thursday 57 249 B 7.20 2
Friday 66 255 5100 1500
Monday 34 258 5160 C 2
Tuesday 48 260 5200 -400
Wednesday 53 266 5320 -020
Thursday 59
Friday 72
sub-total: 8
May 2003 13 FBSM


columns below
For use For use

(d) Explain the purpose of the moving average calculation and why, in
this case, it is based on a 5-day period.
maximum of 20 words 2
(e) Using the available data in the table in requirement (c) and assuming
an additive model, calculate the seasonal component for Monday,
giving your answer correct to two decimal places.
2
(f) For the Tuesday of next week the trend forecast for the sales is 6,600
newspapers. What is the forecast for the overall sales for that day?
3
sub-total: 7
FBSM 14 May 2003

Examination
Question and
Answer Book
Write your full examination number,
your contact ID and your name on a
double-sided card, which must be
attached to this booklet here.
3c FBSM
17 November 2003

require them. For section B questions, you must write your answers in the shaded space provided. Please
note that you will NOT receive marks for your notes or workings. Do not exceed the stated number of
words. Do NOT remove any sheets from this booklet: cross through neatly any work that is not to be
marked. Avoid the use of correction fluid.
Answer the ONE question in section A (this has 25 sub-questions and is on pages 2 12)
Answer the THREE questions in section B (these are on pages 14 21)
Maths Tables and Formulae are provided on pages 22 27
sub-questions.
Do NOT write your name or your contact ID anywhere on this booklet.
TURN OVER
For office use only Total One Two Three Four
Marks awarded (First marker) for each question

Marks awarded (Second marker) for each question

SECTION A 50 MARKS
answer.
REQUIRED:
Place a circle "O" around the letter A, B, C or D that gives the correct answer to each sub-question.
Question One
1.1 A large department store wishes to carry out a survey by issuing a questionnaire to a sample of 100 of
its 2,000 account holders. The sample is to be selected as follows:
Each customer will be allocated a number from 1 to 2000. A table of random numbers from 1 to 20 will
then be used to select the first member of the sample. Every succeeding 20th member of the
population of account holders will then be selected.
This form of sampling is called
A stratified. B multi-stage. C systematic. D quota.
For office use only Total 1.1


1.2 The yearly sales of a particular product from three factories are represented by the following diagram:
Yearly Sales
8000
7000
6000
5000 Factory C
$000
4000 Factory B
3000 Factory A
2000
1000
0
2000 2001 2002
This diagram is an example of
A a Histogram.
B a multiple Bar Chart.
C a Component Bar Chart.
D an Ogive.
1.3 The solution to the simultaneous equations:

4x + 3y = 26
2x - y = 8
in the form (x,y) is
A (2, 5) B (-5, 2) C (-2, 5) D (5, 2)
TURN OVER


1.4
Y
20
18 x x
16
x x
14
12 x x
x x
10
x
8 xx x
6 x x
4 x x
2 x
0 X
0 2 4 6 8 10
Which of the following equations best represents the above scatter diagram:
A Y = 2X + 3 B Y = 3X + 2 C Y = 3X - 2 D Y = 2 - 3X
1.5 A customer paid $230 for a television which had been reduced by 15%. The original price of the
television before the price reduction was closest to
A $243. B $265. C $271. D $276.


1.6 If the rank correlation coefficient between the performances of two groups of fifteen people performing
the same task was -01, which ONE of the following statements is true?
A There is perfect agreement between the performances of the two groups.
B There is moderate agreement between the performances of the two groups.
C There is no agreement between the performances of the two groups.
D This is an impossible result.
1.7 Since 1995, the average annual salaries for a group of workers have been index-linked to prices. The
table below shows the price index since 1997:
(1995 = 100)
Year 1997 1998 1999 2000 2001 2002
Price Index 112 118 122 125 127 130
If the average salaries were $30,000 in 1997, then the average salaries of the workers in 2002 would have
been closest to
A $31,800. B $33,600. C $34,821. D $36,000.
TURN OVER


1.8 A toy manufacturer sells 3 ranges of toys. The following table shows sales information for the last two
years:
Quantity
(000 units)
Range: Price 2001 2002
($/unit)
A 10 30 40
B 15 50 70
C 30 10 15
A relatives quantity index, to the nearest whole number, for the year 2002, with 2001 as the base year, will
be
A 144 B 141 C 139 D 69
1.9 The sum, S, of the first n terms of a geometric series with first term a and common ratio r, is given by
the formula:
a(r n 1)
S=
(r 1)
The sum of the first 8 terms of a geometric series with common ratio 3 is 19,680.
The first term of this series is
A 7 B 6 C 5 D 4


The following data are to be used to answer questions 1.10 and 1.11 below.
A cell phone retailer conducts a survey of 200 cell phone purchasers, and obtains the following results
relating to their ages in years:
Age Under 25 25 to 50 Over 50
Male 40 30 40
Female 60 20 10
1.10 The probability that a randomly selected purchaser is male and aged 50 or under is
A 015 B 027 C 035 D 064
1.11 If the selected purchaser is female, the probability that she is aged 25 to 50 is
A 010 B 022 C 025 D 035
Space for workings to 1.10 and 1.11
1.12 The following table shows the number of cars of a particular model sold by a dealer over the last five
weeks:
Week 1 2 3 4 5
Cars sold 8 3 7 9 4
The expected number of cars of this model to be sold in the year (50 weeks) is
A 300 B 310 C 325 D 350
TURN OVER


1.13 A car insurance company estimates that in a given year, each policyholder will make a "small" claim of
$500 with a probability of 01, a "moderate" claim of $1,000 with a probability of 005, or a "large" claim
of $2,000 with a probability of 001.
In order to break even, between premiums taken in and claims paid out, the company should set the annual
premium for each policy at
A $100. B $120. C $140. D $160.
The following data are to be used to answer questions 1.14 to 1.16 below.
Flights arriving at an airport are subject to delays. The length of the delays is normally
distributed with a mean of 20 minutes and a standard deviation of 8 minutes.
1.14 The probability that a flight will be delayed by less than 10 minutes is nearest to
A 0894 B 0494 C 0250 D 0106
1.15 The probability that a flight will be delayed by between 15 and 25 minutes is nearest to
A 0268 B 0465 C 0535 D 0732
1.16 Approximately 20% of the flight delays are less than
A 11 minutes B 13 minutes C 15 minutes D 17 minutes
Space for workings to 1.14 to 1.16
For office use only Total 1.13 1.14 1.15 1.16


The records of a supplier of an automobile part show that the quarterly demand over the past
three years was as follows:
2000 2001 2002

Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Demand 142 54 162 206 130 50 174 198 126 42 162 186
(000 units)
1.17 Using a 4-point centred moving average, the trend component of the demand (000 units) for Quarter 4
of the year 2000 will be closest to
A 206. B 166. C 160. D 138.
1.18 If an additive model is assumed, and the seasonal components of the demand for quarters 2,3 and 4
are -88, 30 and 66 respectively, the seasonal component of the demand (000 units) for Quarter 1 will
be
A 80 B -80 C 27 D -27
1.19 A small manufacturing company owns two machines, A and B. Machine A is valued at $15,000 10%,
and machine B is valued at $25,000 5%.
The maximum percentage error in the combined value of the two machines is closest to
A 70% B 75% C 100% D 150%
TURN OVER


1.20 Which ONE of the following statements regarding sample measures is INCORRECT?
A The arithmetic mean is always distorted by extreme values.
B The median will not be distorted by extreme values.
C The mode can be distorted by extreme values.
D The standard deviation can be distorted by extreme values.
$20,000 is invested at an interest rate of 4%, which is compounded annually.
1.21 After 10 years, the investment will have a value, to the nearest $, of
A $23,798. B $25,408. C $27,398. D $29,605.
1.22 The investment will have approximately doubled after
A 18 years. B 20 years. C 22 years. D 25 years.


1.23 An individual has taken out a mortgage of $150,000, at a fixed interest rate of 5% per annum over 20
years. Repayments will commence one year after the mortgage is taken out.
The annual repayments will be closest to
A $12,276. B $12,036. C $11,796. D $11,076.
1.24 If the annual rate of interest is 475%, the amount (to the nearest $) that should be invested now in
order to receive $5,000 per annum in perpetuity, with receipts starting one year from now, is
A $100,653. B $102,365. C $103,526. D $105,263.
TURN OVER


1.25 An item of machinery that was purchased 5 years ago for $100,000 now has a value of $50,000.
Assuming the reducing balance method of calculation, the annual rate of depreciation to the nearest
whole percentage point will be
A 17%. B 15%. C 13%. D 11%.
(Total for Question One= 50 Marks)
End of Section A
For office use only Total 1.25


Section B starts on the next page
TURN OVER

SECTION B 50 MARKS
IMPORTANT
MARKS ARE AWARDED FOR COMPLETING THE SHADED BOXES WITH THE CORRECT
ANSWER WHERE A MARK IS INDICATED IN THE RIGHT-HAND COLUMN.
Question Two
Because of an increasing population, the executive committee of a local community centre is planning to
build an extension to its main building. In order to fund this building project, the centre will need to have
$300,000 available at the beginning of January 2005.
To achieve this, the centre intends to make 8 equal quarterly instalments of $X into a sinking fund which
pays a quarterly compound interest rate of 1%. The first of the instalments was paid at the beginning of April
2003.

columns below

by the by the
Write your answers to (a) and (b) in the shaded boxes below Marks first second
(a) Calculate the annual effective interest rate. 2
(b) Calculate the value of the quarterly instalments, $X. 4
Sub-total: 6
Note:
The sum of the first n terms of a geometric series with first term A and common ratio R, is:
A(R n 1)
Sn =
(R 1)
Space for workings for question two
Question Two continues on the next page


The executive committee has estimated that the project will take one year to complete, and will be ready for
use in January 2006. The increased cash flows that will be generated by the centres extended facilities and
fundraising activities during the construction period have been estimated to be $50,000 for each of the first
five years, and then $30,000 for each of the next five years.
columns below

by the by the
Write your answers to parts (c) to (e) in the shaded boxes below Marks first second
(c) The following table shows the calculations necessary to evaluate the Net
Present Value (NPV) of the project, assuming a constant discount rate of
5% per year. Complete the table by replacing the letters with the
appropriate numerical values:
Cash flow Discount Present
Year ($) factor value ($)
2005 = 0 (300,000)
1 50,000
2 50,000 A 2
3 50,000
4 50,000
5 50,000
6 30,000
7 30,000
8 30,000 B 2
9 30,000
10 30,000
NPV 18,290
(d) An alternative way of calculating the NPV would have been to use the
following formula:
NPV = -300,000 + (50,000 x C) + 30,000 x (D - C)
The values that should be inserted for C and D are:
C 2
D 2
(e) Comment on the NPV of the project.
(Total for Question Two = 16 Marks)
Question Three starts on the next page

TURN OVER

Question Three
Airport Catering Ltd provides catering services at airports throughout Europe. Each month, the Sales
Manager is required to produce a statistical report that summarises the companys performance.
The table below shows October's sales figures ($000) at 50 of its branches:
Sales
($000) Frequency
Less than 30 3
30 < 60 5
60 < 90 7
90 < 120 9
120 < 150 11
150 < 180 8
180 < 210 5
210 < 240 2
Total 50

columns below
For use For use

Marks first second
Write your answers to part (a) in the shaded boxes below available marker marker
(a) The following table shows the workings leading to the calculation of
the mean and standard deviation of Octobers sales.
Calculate the numerical values that would occupy the spaces in the
table shown as A, B and C.
Class Mid-
Sales Frequency
point f.x f.x2
($000) (f)
(x)
< 30 3
30 < 60 5
60 < 90 7 A 2
90 < 120 9 B 2
120 < 150 11 C 2
150 < 180 8
180 < 210 5
210 < 240 2
Total 50 5,970 859,050
(b) For October, calculate
(i) The mean sales ($000) 2
(ii) The standard deviation of the monthly sales ($000) 2
Sub-total: 10
Question Three continues on the next page

columns below
For use For use

Marks first second
Write your answer to part (c) in the shaded box below available marker marker
(c) For September, the mean and standard deviation of the monthly
sales figures were $120,100 and $34,450 respectively.
Compare the two months sales figures.
(d) Use the following axes to draw an ogive for Octobers sales figures:
AIRPORT CATERING Ltd

%
100
90
80
70
60
50
40
30
20
10
0
30 60 90 120 150 180 210 240
SALES($000)
3
sub-total: 5
Space for workings to question three
Question Three continues on the next page

TURN OVER

columns below
For use For use

Marks first second
Write your answer to part (e) in the shaded box below available marker marker
(e) The company operates a bonus scheme under which each one of the
10 branches with the highest sales is given a free flight, which can
then be allocated to a member of staff at the branch managers
discretion. Based on your ogive, estimate the monthly sales figure
needed to qualify for the bonus in October.
The estimated monthly figure is $ 2
Space for workings to question three
(Total for Question Three = 17 marks)

Question Four
Each year, a large company, which manufactures domestic electrical appliances, pays its employees an
annual bonus. The Company Accountant wishes to assess the effect of the previous years bonus on the
companys output for the following year.
Data relating to bonus paid (as a percentage of annual salary) and total output (tens of thousands of units
sold) over an 8-year period are given in the following table:
Previous years bonus (%) 0 1 2 3 4 5 6 7

Following years output (0,000s) 3 6 14 15 20 18 24 25

columns below
For use For use

Marks first second
(a) Plot a scatter diagram of the above data on the axes provided:
Scatter Diagram
30
Output (0,000 units)
25
20
15
10
0
0 1 2 3 4 5 6 7 8
Bonus (%)
2
Comment on the relationship shown by your scatter diagram in the
(b) shaded box below.
Sub-total: 4
Question Four continues on the next page
TURN OVER

columns below
For use For use

Marks first second
Write your answers to parts (c) and (d) in the shaded boxes below available marker marker
(c) If Bonus (%) is represented by X, and Output (0,000s) is represented
by Y, the following totals have been calculated from the data given in
the table on page 19:
X = 28, Y = 125, X2 = 140, Y2 = 2391, X.Y = 568
Calculate the correlation coefficient between Bonus and Output,
giving your answer correct to 2 decimal places.
4
(d) The least squares regression equation relating the previous year's
annual bonus to the following years output is:
Output (0,000s) = 475 + 311 x Bonus (%)
In the above equation, what does the value 475 represent?
Sub-total: 7
Space for workings to question four
Question Four continues on the next page

columns below
For use For use

Marks first second
Write your answers to parts (e) to (g) in the shaded boxes below available marker marker
(e) If the annual bonus paid last year was 10%, predict the output for the
current year.
2
(f) Comment on the reliability of the prediction that you made in part (e)
(g) Another similar manufacturing company has found that the coefficient
of determination between Bonus and Output is 086. Explain what this
means.
(Total for Question Four = 17 Marks)
Space for workings to question four
Maths Tables and Formulae are on pages 22 27







3c
FBSM
Business Mathematics

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Foundation Level Business Mathematics

Read this page before you look at the questions

You are allowed TWO hours to answer this question paper.

Ensure that there is graph paper on your desk.

Answer the ONE question in section A (this has 25 sub-questions).

Answer TWO questions ONLY from section B.

The Chartered Institute of Management Accountants 2001

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Number of rejects in each sample: 0 1 2 3 4 5

The arithmetic mean number of rejects per sample is

Year 2000 2001

A 80 B 120 C 125 D 135

A 10% B 20% C 21% D 01Q x 01P

FBSM 2 May 2001

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A 990 B 1,021 C 1,100 D 1,135

When the formula is rearranged, with H as the subject, H equals

2CD 4CD 2CD 2CD

A 1225 B 2009 C 2457 D 3333

(i) It ensures a representative sample.

Which one of the following is always true?

A 37,500 B 40,000 C 42,000 D 43,500

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The tax (to the nearest $) payable on the house sale is

A $28,000 B $37,500 C $40,000 D $70,000

Which set of data (histogram) has the largest standard deviation?

A 5% B 16% C 20% D 34%

Therefore, the value of d equals

A zero B 165 C 330 D none of these.

FBSM 4 May 2001

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A 16,111 B 16,273 C 16,981 D 25,937

Read the following statements.

(i) Annual sales are static.

Which ONE of the following sampling methods is involved?

A cluster B multi-stage C quota D stratified

1.17 The equations of two straight lines are given below:

These lines intersect where the (X, Y) co-ordinates are equal to

A (1,6) B (1,6) C (1,8) D none of these

The following information is to be used for sub-questions 1.18 and 1.19

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(i) Weekly fixed costs are approximately 1,500.

1.19 Read the following statements:

Which one of the following is justified?

Sales High [1m] Medium [05m] Low [025m]

A W only. B X only. C Y only. D Both W and Y.

1.21 Details of an index number are given below:

Group Base Weight Index

The All items index number is closest to

A 130 B 133 C 135 D 146

FBSM 6 May 2001

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This statement is false if X equals

1.23 Which of the following could have a value of 2 (minus 2)?

(i) Correlation coefficient

A 2-point B 3-point C 4-point D None of these.

A (08 x 03 x 04) + (02 x 07 x 04) + (02 x 03 x 06)

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Trend equation: S = 180 10T

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