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KPMG Exam Info 3
KPMG Exam Info 3
TEST 3
Answer Booklet
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Example Questions
25
28
27
26
Phone
In 000s
20
23
22
21
20
19
Internet
15
10
10
12
11
13
0
September
October
November
December
January
February
Ex 1 Between which two months was there the greatest change in the
number of Internet trades made?
Solution
We calculate the change in the number of Internet trades between months (in 000s):
Change
=
Number trades Month (n) Number trades Month (n 1)
Between
Change
From this we can see the greatest change in the number of Internet trades occurred between December and January.
As the Question only referred to the change in the number of trades and not whether the change should be positive or
negative, the change in number between December and January is the correct answer.
Tip
We should do these calculations mentally without resorting to a calculator. Once we have to resort to a calculator or
pen and paper, we start losing time.
Answer
A
September
and October
October
and November
November
and December
December
and January
January
and February
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25%
31%
34%
37%
43%
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Test Questions
US Brewers Share Price in US $
300
285
280
250
231
200
198
187
US $
175
Stella
165
153
150
143
130
125
100
120
Arca
98
90
85
75
73
65
Henecan
50
0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
For how many years was the price of Arca shares closer to that for
Stella than for Henecan?
Solution
We calculate the differences in share prices:
Year
From these calculations we can see that the difference in share price between Arca and Stella is smaller than the
difference in share price between Henecan and Arca for each of the 6 years. Thus the Arca share price is closer to the
Stella share price for all of the 6 years.
Tip
Visually inspecting the chart provided, we can see that Arca share price is closer to the Stella share price for all 6
years except, maybe, Year 4.
A quick calculation shows that the Arca share price is closer to the Stella share price even for Year 4.
Thus, the Arca share price was closer to the Stella share price for all 6 years.
Answer
A
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The question indicates that the expected increase from Year 6 to Year 7 is double that of the increase from Year 5 to
Year 6, an increase of (2
0.2941) = 0.58822.
The Year 7 share price is then:
Year 7 share price
= [$198
(1 + 0.58822)]
= $314.47
The closest answer provided is $314.
Answer
$297
$314
$321
$328
$335
Between which two years did the change in Stellas share price
most closely match the change in Henecans share price?
Solution
We compare the percentage change in share prices by considering the proportional change in share price between
consecutive years per company (this makes the calculations faster without any loss of accuracy):
Proportional change = (Share price Year n+1 Share price Year n)
Year
Year 1 Year 2
$73/$65 = 1.1231
$165/$175 = 0.9429
Year 2 Year 3
$85/$73 = 1.1644
$231/$165 = 1.4
Year 3 Year 4
$75/$85 = 0.8824
$187/$231 = 0.7229
Year 4 Year 5
$120/$75 = 1.6
$280/$187 = 1.4973
Year 5 Year 6
$143/$120 = 1.1917
$285/$280 = 1.0179
Comparing these values we see that the difference in proportional change in share price between Year 4 and Year 5 is
the smallest and, thus, they are the closest match.
Tip
A visual scan of the chart provided shows that the likely years would be, Year 4 to Year 5 or Year 5 to Year 6.
We calculate the proportionate changes for these 2 time periods only, reducing the number of calculations
necessary.
Answer
A
Year 1 to
Year 2
Year 2 to
Year 3
Year 3 to
Year 4
Year 4 to
Year 5
Year 5 to
Year 6
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If in the year prior to Year 1 the share prices of Henecan and Stella
were both 10% higher, what was the actual difference in these
share prices in that year?
Solution
We calculate the share price for each company for the year prior to Year 1. Taking each company in turn, we calculate
the 10% increase in share price as follows:
Prior share price
= 1.1
Company Year 1 share price
So,
Henecan:
Prior share price
= 1.1
$175
= $192.5
Stella:
Prior share price
= 1.1
$65
= $71.5
Now we calculate the difference in share price:
Difference in share price
=
=
$192.5 $71.5
$121
Tip
A faster way of calculating this value is to consider the increase in difference in share price.
We can do this as both share prices increase by the same amount, 10%.
Difference in share price
= ($175 $65)
1.1
= $121
Answer
A
$121
$125
$131
$137
$142
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Euros (millions)
120
Long term
100
Medium term
80
Short term
60
40
20
0
London
Frankfurt
Zurich
Paris
Milan
What was the difference in the value of Medium Term Bonds trades
in Frankfurt compared to Paris?
Solution
We calculate the difference
Difference
=
=
=
Answer
30 million euros
40 million euros
50 million euros
60 million euros
70 million euros
By how much did the total value of all Short Term Bonds traded
exceed that of all Long Term Bonds traded?
Solution
We calculate the difference
Difference
=
=
=
in value of all Short Term Bonds traded and all Long Term Bonds traded (in Euro millions):
total value Short Term Bonds total value Long Term Bonds
(90 + 50 + 40 + 60 + 20) (20 + 30 + 30 + 20 + 10)
150
Answer
A
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Proportion
London
0.267
Frankfurt
0.385
Zurich
0.300
Paris
0.200
Milan
0.250
From this we can see that Paris, as a proportion, traded the fewest Medium Term Bonds.
Tip
To find the correct answer we have to look for a location where a small amount of Medium Bonds are traded and a
large overall amount of Bonds.
This will provide a small proportion which is what we are looking for.
Looking at the chart provided, there are two likely locations: London and Paris.
Looking at the Paris trades and comparing to Paris we can see London should have at least a total value of trade
over 200 million Euros to have a smaller proportion than Paris.
This makes Paris the answer.
Answer
London
Frankfurt
Zurich
Paris
Milan
31.6%
33.5%
36.4%
38.1%
39.4%
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Direct Wine Company: Annual Sales and Profit figures (in $000s)
Total Sales
Total Profits
= (Total Sales
- Total Costs)
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
5,020
4,400
4,850
5,150
5,220
5,820
600
270
-230
-380
310
580
Total Costs
Year 1
4420
88.0%
Year 2
4130
93.9%
Year 3
5080
104.7%
Year 4
5530
107.4%
Year 5
4910
94.1%
Year 6
5240
90.0%
10
Year 2
Year 3
Year 4
Year 5
Year 6
Total Costs
Year 1
4,420
Year 2
4,130
Year 3
5,080
Year 4
5,530
Year 5
4,910
Year 6
5,240
From this we can see Year 4 is the year with the highest Total Costs.
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Tip
Looking at the data provided, we can see that Year 4 or Year 6 would have the highest Total Costs as these years
have the highest Total Sales values.
For Year 4 we add $380,000 to the Total Sales to establish Total Costs.
Comparing this value of Total Costs to Year 6 Total Costs (Total Sales minus Total Profits) we see Year 4 is the
correct answer.
Answer
11
Year 2
Year 3
Year 4
Year 5
Year 6
What was the average annual profit over the 6-year period?
Solution
We calculate the average profit over the 6-year period (in $ 000s):
Average Profit = Total Profits 6
= (600 + 270 + (-230) + (-380) + 310 + 580) 6
=
191.666
Answer
12
$187,666
$191,666
$212,333
$223,133
$266,633
In Year 1, compared with the previous year, both Total Sales and
Total Profits rose by 10% each. What approximately were the Total
Costs in the year prior to Year 1?
Solution
As we are asked for an approximate value for Total Costs, we can calculate the value using mental arithmetic. Working
in $ 000s:
Both Total Sales and Total Profits are 10% less in the year prior to Year 1. From this we know that the Total Costs will
also be 10% less than the Total Costs in Year 1. Total Costs in Year 1 is a bit less than 4,500. 10% of this value is a bit
less than 4,050.
The answer is thus 4,018 or A.
Answer
A
$4,018,182
$4,096,000
$4,128,573
$4,282,000
$4,376,925
10
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13000
Value in $000s
12000
11000
All
products
(Bonds
and
equities)
10000
9000
8000
7000
6000
5000
Year 1
13
Year 2
Year 3
Year 4
Year 5
Year 6
$7.33 million
$7.83 million
$8.17 million
$8.53 million
$8.83 million
11
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14
Proportional change
Year 1 Year 2
-0.25
Year 2 Year 3
0.67
Year 3 Year 4
-0.20
Year 4 Year 5
-0.50
Year 5 Year 6
1.00
From this we can see the biggest proportional increase in the sales of Equity products is Year 5 Year 6.
Tip
Visually inspecting the chart, we can see the only increases in the sales of Equity products were for Year 2 to Year 3
and Year 5 to Year 6.
Year 2 to Year 3 has a change from 3 to 5 units.
Year 5 to Year 6 has a change from 2 to 4 units. This is the time period with the greatest proportional increase.
Answer
A
Year 1 and
Year 2
Year 2 and
Year 3
Year 3
Year 4
Year 4 and
Year 5
Year 5 and
Year 6
12
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15
Proportion
Year 1
0.600
Year 2
0.727
Year 3
0.583
Year 4
0.692
Year 5
0.818
Year 6
0.714
From this we can see that for Year 5 Bonds represented the largest proportion of total financial products sold.
Tip
Visually inspecting the chart provided, we look for the year with smallest difference between all products and Bonds,
and large values for both.
Year 5 fits these criteria the best.
Answer
16
Year 2
Year 3
Year 4
Year 5
Year 6
$14.85 million
$15.60 million
$15.75 million
$17.25 million
$18.35 million
13
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40
Value in $000s
39
36
Sales
32
30
20
23
21
Enquiries
10
15
14
12
15
10
0
Year 1
17
Year 2
Year 3
Year 4
Year 5
Year 6
0.333
0.359
0.476
0.348
0.469
0.600
From this we can see that the age range 16-24 years old has the smallest number of sales per enquiry.
Tip
Visually inspecting the chart provided we look for age ranges where the number of enquiries is large and the number
of sales small.
Age ranges 16-24 years old and 25-34 years old seem like the most likely candidates.
We can see the number of sales per enquiry for 16-24 years old is 1/3. For the age range 25-34 years old to
have a smaller sale per enquiry ratio, the number of sales would have to be less than 13.
The sales for this age range are 14.
Thus the age range 16-24 years old is the correct answer.
Answer
A
16-24 years
25-34 years
35-44 years
45-54 years
55-64 years
14
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18
Assuming 400,000 mail shots were sent out to 25-34 year olds, how
many more enquiries would be generated compared to actual
sales?
Solution
We calculate the number of enquiries and actual sales generated by 400,000 mail shots. The chart provided indicates
the data represented is for 10,000 mail shots, so we calculate the actual sales and enquiries generated using:
Actual Sales
= (400,000 10,000)
14
= 560
Enquiries
= (400,000 10,000)
39
= 1,560
Thus a 1000 more enquiries are generated than actual sales.
Tip
As the ratio of (400,000 10,000) is the same for both equations we need only multiply the difference between
actual sales and enquiries by this ratio:
Difference between enquiries and sales = (400,000 10,000)
(39 14) = 1,000
Answer
19
800
900
1,000
1,100
1,200
Last year there were 630 sales recorded for the 45-54 year old
group. How many mail shots would have been sent out to reach
this figure?
Solution
We calculate the number of mail shots by calculating how many batches of 10,000 would have had to be sent out to
achieve 630 sales:
Number of batches
= 630 8
= 78.75
Number of mail shots
= 78.75
10,000
= 787,500
Answer
A
630,500
625,000
685,500
760,000
787,500
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20
In one year, there were 1.9 million mail shots sent out to people
aged 65 and over compared to 1.1 million mail shots sent out to
people aged 16-24 years old. How many more sales were likely to
have been made to people aged 65 and over?
Solution
We calculate the number of sales generated for each of the age ranges 65 years and older and 16-24 years old by
the respective mail shots:
Sales for 65 years and over
= (1.9 million 10,000)
9
= 1,710
Sales for 16-24 years old
= (1.1 million 10,000)
12
= 1,320
Difference in sales generated
= 1,710 -1,320
= 390
Answer
A
270
336
390
484
533
21
Year 1
Year 2
US Dollar ($)
1.28
1.05
Pound Sterling ()
0.87
0.74
184
156
1.98
1.80
12.70
10.20
How many more Swiss Francs could have been purchased with
3000 Euros in Year 1 compared to Year 2?
Solution
We calculate the number of Swiss Francs purchased with 3000 Euro for Year 1 and Year 2, and take the difference:
Swiss Francs bought Year 1
= 3,000
1.98
= 5,940
Swiss Francs bought Year 2
= 3,000
1.80
= 5,400
Difference
= 5,940 5,400
= 540
Tip
A faster way of calculating this value is to multiply the difference in exchange rates by 3,000:
Difference
= 3,000
(1.98 1.8)
= 540
Answer
A
16
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22
23
HK$ 2,313
HK$ 2,406
HK$ 2,511
HK$ 2,612
HK$ 2,709
Proportional change
US Dollar
0.18
Pound Sterling
0.15
Japanese Yen
0.15
Swiss Franc
0.09
0.20
All of the currencies have appreciated against the Euro but the Swiss Franc has appreciated the least.
Answer
A
US Dollar
Sterling
Yen
Swiss Franc
17
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24
the Pound Sterling in relation to the Euro from Year 1 to Year 2. We calculate this
{[(1/Year 2 Value) (1/Year 1 Value)] (1/Year 1 Value)}
{[(1/0.74) (1/0.87)] (1/0.87)}
100%
17.6%
100%
Tip
A way to understand this calculation is to consider the following, simplified scenario:
In Year 1 a shirt costs $1.
In Year 2 the same shirt costs $2.
Looking at this we can see that the value of the shirt has increased 100% in relation to the Dollar:
Change of value of the shirt
= [($2 $1) $1]
100%
= 100%
Conversely, the value of the Dollar has decreased 50% in relation to the shirt:
Change of value of Pound Sterling
= {[(1/$2) (1/$1)] (1/$1)}
100%
= -50%
We apply the same principle to calculate the change in value of the Pound Sterling in relation to the Euro by
replacing the shirt with Euro and the Dollar with Pound Sterling.
Answer
A
Down 9.1%
Down 8.5%
Up 11.7%
Up 14.3%
Up 17.6%
18
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