Candidates must clearly label their ID Number on additional separate reference, formula or answer sheets.

Question 1 (25 marks)

(a)    Analyse the globalization of business (5 marks) (LO1)

(b)   Examine the growth strategies of firms (5 marks) (LO6)

(c)    Analyse how a shortage and a surplus will eventually lead to market equilibrium. Use diagrams (5 marks) (LO3)

(d)   Analyse the concept of economics (5 marks) (LO3)

(e)   Illustrate price elasticity of demand, including a numerical example. (5 marks) (LO3)

Question 2 (25 marks)

(a)    Analyse the oligopoly market structure (5 marks) (LO3)

(b)   One of the key macroeconomic policy objectives for a government to typically pursue is to maintain low inflation. Analyse what is meant by this and its importance, and identify the other three key macroeconomic objectives (5 marks). (LO2)

(c)    Evaluate competition policy in the UK. (5 marks) (LO2)

(d)   Using UK GDP growth rate for any 20 year period between 1980 and 2015, plot a graph and identify the various business cycle phases in the UK. (5 marks) (LO3) See data on GSM Learn

(e)   Compare and contrast automatic stabilizers and discretionary fiscal policy. Then examine the UK budget speech 2016 and identify the fiscal policy measures proposed in the budget, that is, the tax policy and expenditure policy, and decide on the fiscal policy stance in 2016 (5 marks) (LO2). See Budget 2016 executive summary on GSM Learn

Question 3 (25 marks)

(a)    Examine the four basic financial statements, including formats and purpose. (5 marks) (LO4)

(b)   Download a company financial statement (found in the company annual report) of your choice, for example, Next, Tesco, Marks and Spencer, and calculate five

(5) financial ratios, one each from the following categories– liquidity ratio, market value ratio, asset management ratio, debt management ratio and profitability

ratio for the year 2014. Then analyse these ratios either by comparing it to the industry average, or a similar company, or earlier years for the same company to determine the health of the company by deciding if each ratio is either, good or poor. In your answer, identify the sources of your financial statements. (10 marks). (LO4) and LO6)

(c)    Analyse financial planning and financial control. (5 marks). (LO5)

(d)   Examine the ways in which firms manage their working capital (5 marks) (LO6)

Question 4 (25 marks)

(a)    With reference to the September 2016 yield curve for the UK and the September 2016 yield curve for the US, analyse what a yield curve represent, and why yield curves differ. Use diagrams. (5marks) (LO6). See GSM Learn for data

(b)   Analyse the concept of risk and return. (5 marks). (LO1)

(c)    Suppose you borrow £20,000 for a business you own, and the loan is to be repaid in three equal payments at the end of each of the next three years at an interest of 8 percent. Calculate the Amortization schedule for the next three years (5 marks) (LO5) and (LO6)

(d)   Fanta deposits£400 at the end of the first year, £300 at the end of the second year, and £250 at the end of the third year. If the account earns 5.5 percent interest each year, calculate the future value of this uneven cash flow stream (5 marks) (LO5) and (LO6)

(e)   Two projects being considered are mutually exclusive and have the following projected cash flows:

If the required rate of return on these projects is 12.5 percent, which would be chosen and why? Show your calculations/explanations.  (5 marks) (LO5) and (LO6)