Question 1

What is the primary reason why a compensation professional working for a multinational company should understand regulatory requirements and application of rewards globally?

Options :

A : Because legal compliance with compensation-related regulations is the responsibility of the compensation department

B : Because the compensation professional has a fiduciary responsibility to ensure that the financial resources of their organization are spent in a prudent manner

C : Because it is possible to pay significantly less for talent in different countries and compensation should advise management on when and where to locate various jobs within the company

D : They shouldn't. Due to the complexities of global regulations and practices, compensation administration outside of the home country should be outsourced.

Answer: B

Question 2

Which of the following is the most accurate statement about the business strategy?

Options :

A : It usually is a secondary consideration in compensation design.

B : It is the company-s plan for competitive positioning of its products or services.

C : It must be written after the company-s operating plans are approved by senior management.

D : It is developed for compensation, benefits and the work-life using the HR strategy as a basis.

Answer: B

Question 3

Gross margin is which of the following, as percent of revenue?

Options :

A : Revenue minus cost of goods sold

B : Expenses plus taxes and depreciation

C : Gross profit minus expenses

D : Cost of goods sold

Answer: A

Question 4

What best describes an effective core technique for communicating with executives?

Options :

A : Focus on negative issues first, such as compensation costs exceeding budget, to get their attention

B : Provide a wide range of facts and figures. With their high level of responsibility, executives must have all the data before they can make informed decisions.

C : Assume they have little knowledge of the issue and make a detailed presentation leading up to the purpose of the meeting.

D : Recommend a solution that will solve the issue and explain why it is the best solution available.

Answer: D

Question 5

Regarding fixed and variable costs, what are Finance's primary concerns?

Options :

A : Fixed costs must be kept to a minimum, but variable costs can fluctuate since they tend to correlate with revenue.

B : Variable costs often have a heavier focus than fixed costs, which applies to all areas, including compensation.

C : Fixed costs and variable costs are equally important and both should be kept to a minimum.

D : Fixed costs are not a concern because they cannot be changed, so the focus is primarily on variable costs.

Answer: B