Graduate Management Admission Test (GMAT) — Questions and Answers

Question 1: Which leadership approach best supports performance metrics?

Autocratic decision-making without input
Avoiding all difficult decisions
Delegating all responsibilities without oversight
Collaborative leadership that empowers team members and fosters innovation (Correct answer)

Correct answer: Collaborative leadership that empowers team members and fosters innovation

Collaborative leadership that empowers team members drives engagement, innovation, and better outcomes.

Question 2: How does ethical decision-making apply to stakeholder management?

All decisions should consider legal compliance, stakeholder impact, and organizational values (Correct answer)
Following the law is sufficient without ethical consideration
Ethics are irrelevant in business
Ethics apply only to public-facing decisions

Correct answer: All decisions should consider legal compliance, stakeholder impact, and organizational values

Ethical decision-making requires considering legal compliance, stakeholder impact, and alignment with organizational values.

Question 3: A GMAT boldface Critical Reasoning question labels one sentence as the 'main conclusion.' Which role does the boldface sentence play if it begins with 'Therefore'?

It is the main conclusion (Correct answer)
It is a counterargument
It is background information
It is a supporting premise

Correct answer: It is the main conclusion

'Therefore' is a conclusion indicator word, signaling that the sentence is the main conclusion drawn from preceding premises.

Question 4: How many questions are in the Integrated Reasoning section?

15
8
10
12 (Correct answer)

Correct answer: 12

The Integrated Reasoning section of the GMAT consists of 12 questions. These questions are designed to test your ability to analyze and synthesize information from multiple sources and in various formats. You are allotted 30 minutes to complete this section, making efficient time management essential.

Question 5: A GMAC Data Insights question shows a bar chart where sales increased by 10% each year for 3 years starting at $100K. What are sales in year 3?

$121,000
$130,000
$133,100 (Correct answer)
$110,000

Correct answer: $133,100

Year 1: $110K, Year 2: $121K, Year 3: $133,100 after compounding 10% annually three times.

Question 6: What kind of data might you see in the IR section?

Graphs and tables (Correct answer)
Animations
Video presentations
Audio clips

Correct answer: Graphs and tables

In the IR section, you will frequently encounter data presented in visual and structured formats such as graphs and tables. These are used to test your ability to interpret, analyze, and synthesize quantitative and qualitative information from various sources. This simulates real-world business scenarios where data often comes in these visual forms.

Question 7: What communication strategy is most effective for performance metrics?

Use technical jargon to demonstrate expertise
Communicate only when required by policy
Limit communication to written memos only
Maintain transparent, timely, and audience-appropriate communication (Correct answer)

Correct answer: Maintain transparent, timely, and audience-appropriate communication

Transparent, timely, and audience-appropriate communication builds trust and ensures alignment among stakeholders.

Question 8: What is the typical duration of an MBA program?

4 years
1 year
2 years (Correct answer)
6 months

Correct answer: 2 years

The traditional full-time MBA program in the United States and many other countries is designed to be completed over two academic years. This duration allows students to gain a comprehensive understanding of business fundamentals, specialize in areas of interest, and often complete an internship between their first and second years. While one-year and executive MBA programs exist, two years is the most common and widely recognized duration for a full-time MBA.

Question 9: How many questions are typically in the Verbal section?

25
36 (Correct answer)
20
45

Correct answer: 36

The GMAT Verbal section typically consists of 36 questions. These questions are divided among Sentence Correction, Reading Comprehension, and Critical Reasoning types, and test-takers are allotted 65 minutes to complete this section. Efficient time management and strong verbal reasoning skills are essential to succeed.

Question 10: What is the primary objective of performance metrics in professional practice?

Maximizing short-term profits only
Creating sustainable value for all stakeholders (Correct answer)
Following competitor strategies exactly
Eliminating all business risks

Correct answer: Creating sustainable value for all stakeholders

Performance Metrics aims to create sustainable value for all stakeholders including customers, employees, shareholders, and the community.

Question 11: What risk management principle applies to business ethics?

Accept all risks without analysis
Ignore risks until they become problems
Transfer all risks to insurance
Proactively identify, assess, and mitigate risks through a structured framework (Correct answer)

Correct answer: Proactively identify, assess, and mitigate risks through a structured framework

Proactive risk management through structured identification, assessment, and mitigation is essential for business continuity.

Question 12: Which approach best reflects 'creating shared value' as described by Porter and Kramer?

Donating a fixed percentage of profits to charity
Pursuing business strategies that create economic value by addressing societal needs (Correct answer)
Minimizing all costs regardless of social impact
Lobbying to reduce regulation

Correct answer: Pursuing business strategies that create economic value by addressing societal needs

Shared value links company success with social progress by redesigning products, value chains, or local clusters.

Question 13: How should performance be measured in organizational leadership?

Using a single financial metric
Relying on subjective impressions
Measuring only when problems arise
Using balanced scorecards with multiple key performance indicators (Correct answer)

Correct answer: Using balanced scorecards with multiple key performance indicators

Balanced scorecards with multiple KPIs provide a comprehensive view of performance across financial, customer, process, and learning dimensions.

Question 14: A Data Insights question asks: A store's profit margin is 15% and its revenue is $80,000. What is the profit?

$12,000 (Correct answer)
$15,000
$10,000
$8,000

Correct answer: $12,000

Profit = 15% × $80,000 = 0.15 × $80,000 = $12,000.

Question 15: A firm's suppliers threaten to stop deliveries unless payment terms improve. Under the salience model, these suppliers have gained which combination of attributes?

Power and urgency only
Legitimacy only
Urgency and legitimacy only
Power, legitimacy, and urgency (Correct answer)

Correct answer: Power, legitimacy, and urgency

Suppliers have a legitimate contractual relationship, power to withhold inputs, and an urgent demand, making them definitive stakeholders.

Question 16: Which legislation enacted in 2002 most significantly strengthened corporate governance and financial reporting transparency?

The Foreign Corrupt Practices Act
The Securities Exchange Act of 1934
The Sarbanes-Oxley Act (Correct answer)
The Dodd-Frank Wall Street Reform Act

Correct answer: The Sarbanes-Oxley Act

The Sarbanes-Oxley Act (SOX) was passed in 2002 in direct response to Enron and WorldCom scandals to improve corporate accountability and financial reporting integrity.

Question 17: In a GMAC Data Insights question, a table shows that Company A's revenue grew from $2M to $3M while Company B's grew from $5M to $7M. Which company had the higher percentage growth?

Company A (Correct answer)
Cannot be determined
Both grew equally
Company B

Correct answer: Company A

Company A grew 50% ($2M to $3M) while Company B grew 40% ($5M to $7M), making Company A's percentage growth higher.

Question 18: A GMAC Data Insights scatter plot shows a strong positive correlation between advertising spend and sales. Which conclusion is best supported?

Higher ad spend is associated with higher sales (Correct answer)
The data proves a causal relationship
Lower sales cause lower ad spend
Higher ad spend causes higher sales

Correct answer: Higher ad spend is associated with higher sales

Correlation shown in a scatter plot indicates association, not causation.

Question 19: Which type of writing task is required in the AWA section?

Argument essay (Correct answer)
Descriptive story
Narrative essay
Persuasive letter

Correct answer: Argument essay

The AWA section of the GMAT requires test takers to write an "Analysis of an Argument" essay. In this task, candidates are presented with a short argument and must critically analyze its reasoning, identifying flaws, assumptions, and potential weaknesses. They are not asked to present their own opinion on the topic, but rather to evaluate the logical soundness of the given argument.

Question 20: A business school applicant argues: 'I should be admitted because I need the degree to advance my career.' Why is this a weak argument?

Admission should be based on test scores only
MBA programs do not advance careers
Career goals are irrelevant to admissions
Need alone does not demonstrate merit or qualification (Correct answer)

Correct answer: Need alone does not demonstrate merit or qualification

Admissions decisions are merit-based; personal need does not demonstrate the applicant's ability to succeed in the program.

Question 21: How does ethical decision-making apply to process improvement?

Following the law is sufficient without ethical consideration
Ethics apply only to public-facing decisions
All decisions should consider legal compliance, stakeholder impact, and organizational values (Correct answer)
Ethics are irrelevant in business

Correct answer: All decisions should consider legal compliance, stakeholder impact, and organizational values

Ethical decision-making requires considering legal compliance, stakeholder impact, and alignment with organizational values.

Question 22: Which skill is tested by critical reasoning questions?

Basic math
Reading fluency
Grammar rules
Logical evaluation (Correct answer)

Correct answer: Logical evaluation

Critical Reasoning questions in the Verbal section specifically test your ability to logically evaluate arguments. This involves identifying assumptions, drawing inferences, assessing the strength or weakness of conclusions, and understanding the structure of short passages. It measures your capacity for analytical and logical thought, crucial for business decision-making.

Question 23: In Kotter's eight-step model for leading change, what is the first step?

Communicate the vision
Generate short-term wins
Create a sense of urgency (Correct answer)
Form a guiding coalition

Correct answer: Create a sense of urgency

Kotter argues change starts with establishing urgency so people see why the status quo can't continue.

Question 24: An argument states: 'No evidence of fraud was found during the audit; therefore, no fraud occurred.' This argument assumes:

The company has a history of good practices
Auditors are always honest
Fraud is rare in this industry
The audit was thorough enough to detect any fraud if it existed (Correct answer)

Correct answer: The audit was thorough enough to detect any fraud if it existed

The argument assumes absence of evidence equals evidence of absence, which requires the audit to be comprehensive.

Question 25: What communication strategy is most effective for stakeholder management?

Communicate only when required by policy
Limit communication to written memos only
Maintain transparent, timely, and audience-appropriate communication (Correct answer)
Use technical jargon to demonstrate expertise

Correct answer: Maintain transparent, timely, and audience-appropriate communication

Transparent, timely, and audience-appropriate communication builds trust and ensures alignment among stakeholders.

Question 26: A table-analysis question shows 5 departments with headcount: HR=10, Finance=25, IT=40, Sales=60, Ops=15. What percentage of total employees work in IT?

28.0%
26.0%
25.0%
26.7% (Correct answer)

Correct answer: 26.7%

IT has 40 out of 150 total employees (10+25+40+60+15), so 40/150 ≈ 26.7%.

Question 27: When are most MBA application deadlines?

Throughout the year in rounds (Correct answer)
January only
Every week
Only in summer

Correct answer: Throughout the year in rounds

Most MBA programs utilize a 'rounds' system for applications, with multiple deadlines spread across the academic year (e.g., Round 1 in fall, Round 2 in winter, Round 3 in spring). This allows applicants flexibility in submitting their materials and gives admissions committees time to review applications thoroughly. While specific dates vary by school, applications are generally accepted in distinct periods rather than continuously or only at one time.

Question 28: A step has 3 parallel workers, each taking 12 minutes per unit. What is that step's capacity per hour?

36 units
15 units (Correct answer)
4 units
5 units

Correct answer: 15 units

Each worker makes 5 units per hour, so 3 workers produce 15 units per hour.

Question 29: What is the primary purpose of the Analytical Writing Assessment (AWA)?

To evaluate analytical writing skills (Correct answer)
To assess mathematical reasoning
To check memorization
To test vocabulary knowledge

Correct answer: To evaluate analytical writing skills

The primary purpose of the Analytical Writing Assessment (AWA) section of the GMAT is to evaluate a test taker's ability to think critically and communicate complex ideas effectively in written English. It specifically assesses how well one can analyze an argument, articulate a critique, and support it with relevant examples and explanations. This section is not designed to test mathematical reasoning, vocabulary, or memorization.

Question 30: What is the primary objective of stakeholder management in professional practice?

Creating sustainable value for all stakeholders (Correct answer)
Maximizing short-term profits only
Following competitor strategies exactly
Eliminating all business risks

Correct answer: Creating sustainable value for all stakeholders

Stakeholder Management aims to create sustainable value for all stakeholders including customers, employees, shareholders, and the community.

Question 31: What is the main strategy for data sufficiency questions?

Determine if data is enough (Correct answer)
Guess based on context
Always use both statements
Estimate the result

Correct answer: Determine if data is enough

The main strategy for Data Sufficiency questions is to determine whether the given statements provide sufficient information to answer the question, rather than actually solving the problem. You must evaluate each statement independently and then together to decide if the data is adequate. This approach saves time by avoiding unnecessary calculations.

Question 32: Which document explains your goals and why you're applying?

Statement of purpose (Correct answer)
Transcripts
Resume
Reference letter

Correct answer: Statement of purpose

The Statement of Purpose (also known as an admissions essay or personal statement) is the document where you explain your career goals and articulate why you are applying to a specific program. It allows you to showcase your motivations, aspirations, and how your experiences align with the program's offerings. This essay is crucial for demonstrating your fit and communication skills.

Question 33: 'Whenever the economy grows, unemployment falls. The economy grew last quarter. Therefore, unemployment fell last quarter.' This is an example of:

Circular reasoning
False analogy
Valid deductive reasoning (Correct answer)
Inductive reasoning

Correct answer: Valid deductive reasoning

The argument follows a valid deductive form (modus ponens): if P then Q; P is true; therefore Q is true.

Question 34: Which leadership approach best supports process improvement?

Avoiding all difficult decisions
Autocratic decision-making without input
Collaborative leadership that empowers team members and fosters innovation (Correct answer)
Delegating all responsibilities without oversight

Correct answer: Collaborative leadership that empowers team members and fosters innovation

Collaborative leadership that empowers team members drives engagement, innovation, and better outcomes.

Question 35: A GMAC table shows 4 product lines with the following net margins: P1=8%, P2=12%, P3=5%, P4=15%. Which has the highest net margin?

P3
P2
P1
P4 (Correct answer)

Correct answer: P4

Comparing 8%, 12%, 5%, and 15%, the highest is P4 at 15%.

Question 36: In a GMAC graphics interpretation question, a pie chart shows that 35% of costs are labor. If total costs are $200,000, how much is spent on labor?

$70,000 (Correct answer)
$75,000
$60,000
$65,000

Correct answer: $70,000

35% of $200,000 = 0.35 × $200,000 = $70,000.

Question 37: On a control chart, a single point falling outside the upper control limit most likely signals what?

Common-cause variation
A capable process
Special-cause variation (Correct answer)
Normal random noise

Correct answer: Special-cause variation

Points beyond control limits indicate an assignable, special cause that should be investigated.

Question 38: What is the first step in the business school admissions process?

Request recommendations
Schedule your interview
Submit your GMAT scores
Research programs and requirements (Correct answer)

Correct answer: Research programs and requirements

The first and most crucial step in the business school admissions process is to thoroughly research programs and their specific requirements. This helps you identify schools that align with your career goals and ensures you meet all necessary prerequisites before investing time in applications, GMAT preparation, or interviews. Proper research lays the foundation for a successful application.

Question 39: In a GMAC data sufficiency-style question: Is integer n divisible by 6? Statement 1: n is divisible by 3. Statement 2: n is divisible by 2. Are the two statements together sufficient?

No, neither alone is sufficient
Statement 1 alone is sufficient
Yes, together they are sufficient (Correct answer)
Statement 2 alone is sufficient

Correct answer: Yes, together they are sufficient

Divisibility by both 2 and 3 is necessary and sufficient for divisibility by 6.

Question 40: A two-part analysis asks you to determine if a dataset's median is less than its mean. Given values 2, 3, 3, 4, 18, what is the median?

18
2
3 (Correct answer)
4

Correct answer: 3

When the five values are sorted (2,3,3,4,18), the middle (third) value is 3, which is the median.

Question 41: How should performance be measured in business ethics?

Using balanced scorecards with multiple key performance indicators (Correct answer)
Relying on subjective impressions
Using a single financial metric
Measuring only when problems arise

Correct answer: Using balanced scorecards with multiple key performance indicators

Balanced scorecards with multiple KPIs provide a comprehensive view of performance across financial, customer, process, and learning dimensions.

Question 42: Which leadership approach best supports stakeholder management?

Autocratic decision-making without input
Delegating all responsibilities without oversight
Avoiding all difficult decisions
Collaborative leadership that empowers team members and fosters innovation (Correct answer)

Correct answer: Collaborative leadership that empowers team members and fosters innovation

Collaborative leadership that empowers team members drives engagement, innovation, and better outcomes.

Question 43: Which leadership approach best supports financial analysis?

Delegating all responsibilities without oversight
Collaborative leadership that empowers team members and fosters innovation (Correct answer)
Autocratic decision-making without input
Avoiding all difficult decisions

Correct answer: Collaborative leadership that empowers team members and fosters innovation

Collaborative leadership that empowers team members drives engagement, innovation, and better outcomes.

Question 44: A multi-source reasoning passage states a project is 60% complete after 9 months. At this rate, how many total months will the project take?

12 months
15 months (Correct answer)
18 months
14 months

Correct answer: 15 months

If 60% takes 9 months, then 100% takes 9/0.60 = 15 months.

Question 45: What risk management principle applies to process improvement?

Ignore risks until they become problems
Accept all risks without analysis
Proactively identify, assess, and mitigate risks through a structured framework (Correct answer)
Transfer all risks to insurance

Correct answer: Proactively identify, assess, and mitigate risks through a structured framework

Proactive risk management through structured identification, assessment, and mitigation is essential for business continuity.

Question 46: What is the primary objective of strategic planning in professional practice?

Eliminating all business risks
Maximizing short-term profits only
Creating sustainable value for all stakeholders (Correct answer)
Following competitor strategies exactly

Correct answer: Creating sustainable value for all stakeholders

Strategic Planning aims to create sustainable value for all stakeholders including customers, employees, shareholders, and the community.

Question 47: An argument states: 'Because our customers rated us highly in a satisfaction survey, all of our stakeholders must be satisfied.' What is the main flaw?

It generalizes from one stakeholder group to all groups (Correct answer)
It relies on too small a sample of customers
It assumes the survey was anonymous
It confuses correlation with causation

Correct answer: It generalizes from one stakeholder group to all groups

Customer satisfaction says nothing about employees, suppliers, communities, or investors, so the conclusion overgeneralizes.

Question 48: A two-part analysis asks: If the probability of Event A is 0.4 and Event B is 0.5, and they are independent, what is P(A and B)?

0.10
0.90
0.20 (Correct answer)
0.45

Correct answer: 0.20

For independent events, P(A and B) = P(A) × P(B) = 0.4 × 0.5 = 0.20.

Question 49: What communication strategy is most effective for business ethics?

Communicate only when required by policy
Limit communication to written memos only
Maintain transparent, timely, and audience-appropriate communication (Correct answer)
Use technical jargon to demonstrate expertise

Correct answer: Maintain transparent, timely, and audience-appropriate communication

Transparent, timely, and audience-appropriate communication builds trust and ensures alignment among stakeholders.

Question 50: Which tool visually maps stakeholders along axes of influence and impact to prioritize engagement?

Gantt chart
Influence/impact grid (Correct answer)
Fishbone diagram
Pareto chart

Correct answer: Influence/impact grid

An influence/impact grid classifies stakeholders by their ability to affect the project and the project's effect on them.

Question 51: A graphics interpretation question shows that Region A has 1,200 units sold and Region B has 800 units sold. What is the ratio of Region A to Region B sales?

5:4
2:1
3:2 (Correct answer)
4:3

Correct answer: 3:2

1,200:800 simplifies by dividing both by 400 to give 3:2.

Question 52: A two-part analysis question: A company's costs increased 20% and revenue increased 25%. If original profit margin was 10%, did the absolute profit increase?

Yes, it increased (Correct answer)
Cannot be determined without exact figures
It stayed the same
No, it decreased

Correct answer: Yes, it increased

With proportional increases where revenue grows faster than costs, absolute profit increases.

Question 53: In a multi-source reasoning question, one email states a shipment arrives Friday; a memo says processing takes 2 business days. If Friday is Day 1 of processing, what is the earliest completion day?

Saturday
Monday
Tuesday (Correct answer)
Sunday

Correct answer: Tuesday

Friday is Day 1 and Monday is Day 2 of business processing, so completion is end of Monday — earliest availability is Tuesday.

Question 54: How does ethical decision-making apply to financial analysis?

Ethics are irrelevant in business
Ethics apply only to public-facing decisions
Following the law is sufficient without ethical consideration
All decisions should consider legal compliance, stakeholder impact, and organizational values (Correct answer)

Correct answer: All decisions should consider legal compliance, stakeholder impact, and organizational values

Ethical decision-making requires considering legal compliance, stakeholder impact, and alignment with organizational values.

Question 55: Which of Schein's levels of organizational culture is the most deeply embedded and hardest to observe?

Basic underlying assumptions (Correct answer)
Artifacts
Formal policies
Espoused values

Correct answer: Basic underlying assumptions

Basic underlying assumptions are unconscious, taken-for-granted beliefs at the core of a culture.

Question 56: Which leadership approach best supports strategic planning?

Collaborative leadership that empowers team members and fosters innovation (Correct answer)
Autocratic decision-making without input
Delegating all responsibilities without oversight
Avoiding all difficult decisions

Correct answer: Collaborative leadership that empowers team members and fosters innovation

Collaborative leadership that empowers team members drives engagement, innovation, and better outcomes.

Question 57: Is partial credit awarded in IR?

Yes, for all questions
Only on math-based questions
Yes, if attempted
No, all parts must be correct (Correct answer)

Correct answer: No, all parts must be correct

No, partial credit is not awarded in the Integrated Reasoning section. Many IR questions have multiple parts, and for a question to be scored as correct, all parts must be answered accurately. This 'all-or-nothing' scoring emphasizes the need for precision and a complete understanding of the information presented.

Question 58: How does ethical decision-making apply to strategic planning?

All decisions should consider legal compliance, stakeholder impact, and organizational values (Correct answer)
Ethics are irrelevant in business
Following the law is sufficient without ethical consideration
Ethics apply only to public-facing decisions

Correct answer: All decisions should consider legal compliance, stakeholder impact, and organizational values

Ethical decision-making requires considering legal compliance, stakeholder impact, and alignment with organizational values.

Question 59: How should performance be measured in process improvement?

Relying on subjective impressions
Using balanced scorecards with multiple key performance indicators (Correct answer)
Measuring only when problems arise
Using a single financial metric

Correct answer: Using balanced scorecards with multiple key performance indicators

Balanced scorecards with multiple KPIs provide a comprehensive view of performance across financial, customer, process, and learning dimensions.

Question 60: A GMAC graph shows sales data for Q1–Q4. Q1=$10K, Q2=$15K, Q3=$12K, Q4=$18K. What is the average quarterly sales?

$13,750 (Correct answer)
$14,000
$13,500
$15,000

Correct answer: $13,750

Average = (10+15+12+18)/4 = 55/4 = $13,750.

Question 61: 'Most successful entrepreneurs dropped out of college. Therefore, dropping out of college increases one's chance of entrepreneurial success.' This argument commits which error?

Circular reasoning
False dilemma
Hasty generalization
Confusing correlation with causation (Correct answer)

Correct answer: Confusing correlation with causation

The argument incorrectly infers that dropout status causes success rather than recognizing it as a correlated trait.

Question 62: What risk management principle applies to performance metrics?

Transfer all risks to insurance
Ignore risks until they become problems
Accept all risks without analysis
Proactively identify, assess, and mitigate risks through a structured framework (Correct answer)

Correct answer: Proactively identify, assess, and mitigate risks through a structured framework

Proactive risk management through structured identification, assessment, and mitigation is essential for business continuity.

Question 63: Which of the following most effectively resolves the paradox: 'Sales increased, yet profits declined'?

The company hired more salespeople
Operating costs rose faster than revenue growth (Correct answer)
Customers purchased more items
The company expanded into new markets

Correct answer: Operating costs rose faster than revenue growth

If costs grew faster than revenue, profits could fall despite higher sales, resolving the apparent contradiction.

Question 64: In a multi-source reasoning question, Source 1 says a product has 20% market share, Source 2 says the total market is $500M. What is the product's estimated market value?

$200M
$100M (Correct answer)
$25M
$50M

Correct answer: $100M

20% of $500M = 0.20 × $500M = $100M.

Question 65: Which practice most effectively builds long-term trust with community stakeholders near a new facility?

Limiting contact to avoid raising concerns
Communicating solely through legal representatives
Engaging the community early and consistently, including before decisions are final (Correct answer)
Announcing decisions only after construction begins

Correct answer: Engaging the community early and consistently, including before decisions are final

Early, two-way engagement gives communities a real voice and reduces opposition later.

Question 66: How long is the Quantitative section?

62 minutes (Correct answer)
30 minutes
60 minutes
45 minutes

Correct answer: 62 minutes

The GMAT Quantitative section is 62 minutes long. During this time, test-takers must answer 31 questions, which are a mix of Problem Solving and Data Sufficiency types. Effective time management is crucial to complete all questions accurately within the allotted time.

Question 67: How does ethical decision-making apply to performance metrics?

Ethics apply only to public-facing decisions
All decisions should consider legal compliance, stakeholder impact, and organizational values (Correct answer)
Ethics are irrelevant in business
Following the law is sufficient without ethical consideration

Correct answer: All decisions should consider legal compliance, stakeholder impact, and organizational values

Ethical decision-making requires considering legal compliance, stakeholder impact, and alignment with organizational values.

Question 68: 'City X banned plastic bags, and plastic bag litter in City X decreased by 40%. Other cities should ban plastic bags too.' Which of the following, if true, most strengthens this argument?

Residents found paper bags inconvenient
Plastic bags are cheap to produce
Similar bans in other cities produced comparable litter reductions (Correct answer)
City X also increased fines for littering

Correct answer: Similar bans in other cities produced comparable litter reductions

Evidence that similar interventions produced similar results in other cities strengthens the generalization.

Question 69: What risk management principle applies to financial analysis?

Ignore risks until they become problems
Transfer all risks to insurance
Proactively identify, assess, and mitigate risks through a structured framework (Correct answer)
Accept all risks without analysis

Correct answer: Proactively identify, assess, and mitigate risks through a structured framework

Proactive risk management through structured identification, assessment, and mitigation is essential for business continuity.

Question 70: A two-part analysis question presents: If x > 0 and y > 0, and x/y = 0.75, what is y/x?

0.75
1.50
1.33 (Correct answer)
1.25

Correct answer: 1.33

If x/y = 0.75 = 3/4, then y/x = 4/3 ≈ 1.33.

Question 71: What risk management principle applies to stakeholder management?

Transfer all risks to insurance
Ignore risks until they become problems
Accept all risks without analysis
Proactively identify, assess, and mitigate risks through a structured framework (Correct answer)

Correct answer: Proactively identify, assess, and mitigate risks through a structured framework

Proactive risk management through structured identification, assessment, and mitigation is essential for business continuity.

Question 72: A company plans to close a plant in a small town. Which stakeholder group is most likely to be classified as 'dependent' in the salience model?

Federal regulators
Local residents and workers lacking power to influence the decision (Correct answer)
Institutional shareholders
The company's board of directors

Correct answer: Local residents and workers lacking power to influence the decision

Dependent stakeholders have legitimate and urgent claims but lack power, relying on others to advocate for them.

Question 73: What is the primary objective of financial analysis in professional practice?

Maximizing short-term profits only
Eliminating all business risks
Following competitor strategies exactly
Creating sustainable value for all stakeholders (Correct answer)

Correct answer: Creating sustainable value for all stakeholders

Financial Analysis aims to create sustainable value for all stakeholders including customers, employees, shareholders, and the community.

Question 74: 'Either we increase the marketing budget or sales will decline.' Which assumption does this argument rely on?

Marketing is the only department with a budget
No other factors can prevent a sales decline (Correct answer)
Increasing the budget guarantees sales growth
Sales have already been declining

Correct answer: No other factors can prevent a sales decline

The either/or structure assumes no other action (like improving the product or cutting price) could maintain sales.

Question 75: Which of the following is the BEST example of a leader using referent power?

Gaining cooperation because followers admire and identify with them (Correct answer)
Citing a job title to require compliance
Offering bonuses for extra hours
Threatening demotion for missed deadlines

Correct answer: Gaining cooperation because followers admire and identify with them

Referent power rests on followers' admiration and personal identification with the leader.

Question 76: A CEO announces a sustainability initiative primarily to preempt activist investor pressure. This approach to stakeholders is best described as:

Passive monitoring
Proactive (Correct answer)
Defensive denial
Reactive

Correct answer: Proactive

Anticipating stakeholder demands and acting before pressure escalates is a proactive strategy.

Question 77: In a table analysis, you sort by 'profit margin' descending. Company X has revenue $500K and costs $425K. What is its profit margin?

15% (Correct answer)
14%
17%
16%

Correct answer: 15%

Profit = $500K − $425K = $75K; margin = $75K/$500K = 15%.

Question 78: What does the GMAT score represent in an MBA application?

Academic aptitude (Correct answer)
Extracurricular involvement
Work experience
Interview skills

Correct answer: Academic aptitude

The GMAT score represents a candidate's academic aptitude, specifically their analytical, quantitative, verbal, and integrated reasoning skills. Business schools use it as a standardized measure to assess an applicant's readiness for the rigorous academic demands of an MBA program. It provides an objective indicator of your potential to succeed in a graduate-level business curriculum.

Question 79: What is one benefit of mastering the verbal section?

Improved logical thinking and communication (Correct answer)
Better grammar in texts
Faster reading only
Stronger accent

Correct answer: Improved logical thinking and communication

Mastering the Verbal section, particularly Critical Reasoning and Reading Comprehension, significantly improves logical thinking and communication skills. These sections require analyzing arguments, understanding complex texts, and identifying underlying assumptions, which are critical for effective decision-making and conveying ideas clearly in a business context. It enhances your ability to process and articulate information.

Graduate Management Admission Test (GMAT)

The GMAT is a standardized exam designed to assess analytical, writing, quantitative, verbal, and reading skills for admission to graduate management programs.

Questions

135 min

Time Limit

50%

To Pass

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Exam Rules

You can skip questions and return to them later
Flag questions for review before submitting
No feedback shown until you submit the entire exam
Unanswered questions count as wrong — answer everything
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These practice questions were written with AI tools. They are not real exam questions. Exam facts are checked against the official sources listed below. Not reviewed by a subject-matter expert. Editorial policy

Sources & references

Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy

mba.com — Passing score, score validity, retake policy, exam format, test delivery, fees, test dates, eligibility · verified Oct 2026