Mock Exam

Question 1

What is the formula for market capitalisation?

Answer 1

Current market price x number of shares issued

Question 2

What is market capitalisation?

Answer 2

The total value of issued shares of a plc and helps to indicate the investors’ opinions of a company’s net worth/ overall value

Question 3

What is a private sector organisation?

Answer 3

Owned and financed by individuals or a group of people. They can be incorporated and unincorporated

Question 4

What is a public sector organisation?

Answer 4

An organisation owned by the government and financed by tax. E.g. NHS, Police, Army

Question 5

Characteristics of a sole trader

Answer 5

Owned/ run by one person with unlimited liability e.g. hairdressers, plumbers or builders

Question 6

Advantages of sole traders

Answer 6

Quick and easy to set up
Keep all profit
Be own boss
More privacy as financial details aren’t published

Question 7

Disadvantages of sole traders?

Answer 7

Unlimited liability
Hard to raise finance
Lack of help and limited skills

Question 8

Characteristics of private limited companies

Answer 8

Run by a family or small group of people
Relatively private
Funded by shares that can’t be sold on the stock exchange
E.g. New Look

Question 9

Advantages of being an Ltd

Answer 9

More control
Keep more profit
Limited liability
Information private

Question 10

Disadvantages of being an Ltd

Answer 10

Harder to raise finance than a plc
Share profits among shareholders
More legal formalities than being a sole trader