ICAN Business Environment 2023 past questions and answers

1. Each shareholder is personally liable for all company debts, regardless of investment.
2. Each shareholder's liability is generally limited to any unpaid amount on the shares held.
3. Only the shareholder with the largest holding is liable for the company's debts.
4. Shareholders have no liability even where they have not paid for their shares.

Answer: B. Each shareholder's liability is generally limited to any unpaid amount on the shares held.

A company limited by shares is a separate legal person, and a member's liability is generally limited to the amount unpaid on that member's shares. Option D overstates the protection because unpaid share capital remains due.

1. Sole proprietorship
2. Ordinary partnership
3. Private company limited by shares
4. Public company limited by shares

Answer: D. Public company limited by shares

A public company may offer its shares to the public, subject to applicable law and any listing rules. A private company is restricted from inviting the public to subscribe for its shares.

1. Borrowing-funded investment may become less attractive because financing costs rise.
2. The cost of all imported inputs must immediately fall.
3. Businesses' tax liabilities automatically decrease.
4. Consumer demand must rise because loan repayments are higher.

Answer: A. Borrowing-funded investment may become less attractive because financing costs rise.

Higher interest rates increase the cost of borrowing and can cause firms to defer projects whose expected returns no longer justify financing costs. They do not automatically change tax liabilities or imported-input prices.

1. The naira cost of imported stock falls.
2. The retailer's foreign-currency exposure disappears.
3. The naira cost of imported stock rises.
4. The retailer's sales revenue is guaranteed to rise by the same percentage.

Answer: C. The naira cost of imported stock rises.

A weaker naira means more naira are required to buy the same amount of dollars, raising the local-currency cost of imports. Higher costs do not guarantee that sales revenue will rise correspondingly.

1. Infrastructure spending eliminates inflation and always reduces public debt.
2. Improved infrastructure can lower operating costs, while borrowing may increase debt-service obligations.
3. The spending can benefit only public-sector organisations and cannot affect private firms.
4. Borrowing necessarily reduces the supply of money and guarantees lower interest rates.

Answer: B. Improved infrastructure can lower operating costs, while borrowing may increase debt-service obligations.

Better roads and power can improve productivity and reduce costs for private firms, while borrowing adds to public debt and future debt service. Option A incorrectly treats both effects as certain and cost-free.