Business Acumen for Compensation Professional (C8) Free Practice Test

Question 1

Which of the following best describes present value?

A. The current value of holdings and how much it will grow over time at a given rate of return

B. The difference between the desired value in the future and the current value as a percentage of the desired value

C. The desired value in the future and what needs to be invested today to realize that amount

D. The current value of holdings

Correct Answer: C

Question 2

The Alpha Company was once a strong company that commanded a high percentage of the market it operated in. In recent years, Alpha has been losing market share to competitors in its primary line of business and has been unable to find a competitive strategy to grow and return to profitability. Given its market position, how is Alpha most likely finding the monetary resources to continue operations?

A. By selling its products and services at a loss until revenue increases and slowly raising prices until it begins to break even

B. By identifying and duplicating the strategy used by its main competitor.

C. By using cash from other segments of the business

D. By using its high credit rating from prior years to receive a line of credit until the strategy begins to work

Correct Answer: C

Question 3

Administering budgets is an example of what key competency for compensation professionals?

A. Resource Management

B. HR Management

C. Financial Management

D. Policy Management

Correct Answer: C

Question 4

What is the term for the skills, technologies, applications and practices of continuous iterative exploration and investigation of past business performance used to gain insight and drive business planning?

A. Predictive modeling

B. Business analytics

C. Statistical analysis

D. Business forecasting

Correct Answer: B

Question 5

The XYZ Company focuses on maintaining/increasing market share and its products tend to be more evolutionary than revolutionary. What stage of the business lifecycle is XYZ most likely in?

A. Start-up

B. Growth

C. Decline

D. Mature

Correct Answer: D

Question 6

Who are you most likely to hear from if there are questions about an employee's compensation?

A. The employee's department head

B. A concerned co-worker

C. The employee's manager

D. The employee

Correct Answer: C

Question 7

Which of the following factors has the greatest impact on how aggressive a stance (high vs. low) an organization will take in terms of where it positions itself against the market with its compensation strategy?

A. The risk tolerance of compensation leaders

B. The bottom line

C. The industry it operates in

D. The organizational headcount

Correct Answer: B

Question 8

If a company has a higher percentage of employees with fixed compensation than variable compensation, what happens as revenues increase?

A. Compensation costs eventually decrease as a percent of revenue, increasing profit growth.

B. Compensation costs remain the same as a percent of revenue until variable compensation costs exceed fixed compensation costs.

C. Compensation costs and revenue increase at approximately the same rate.

D. Compensation costs eventually stabilize and become a consistent percent of revenue.

Correct Answer: A

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WorldatWork Business Acumen for Compensation Professional (C8) Free Practice Test