CIMA Exam CIMAPRA19-P03-1 Topic 6 Question 29 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 29
Topic #: 6

H manufactures and sellshealthy dietary supplements. The companyrecruits individuals as part-timeagents to sellitsproductstofriends and colleagues. These agents are required to buy H's products and to resell them at asmall mark-up.

For a fee, H will provideagents withtrainingin persuasive selling techniques. Agents who pass exams at the conclusion of this training can become distributors. Distributors buy bulk quantities of H's products at a discount and can recruit their own sales agents. Those agents can also take training and can recruit agents of their own.

At what stage does H stop being a legitimate business and become apyramidsellingfraud?

AWhen it asks its agents to buy product and marketing material up front.

BWhenit offers returns on its agents' investments that seem remarkable.

CWhen it offers its agents more reward for recruiting other agents than for selling its product.

DWhen its training programmes promise to unlock the secret of selling its product.

Show Suggested Answer

Suggested Answer: A, B, D

by Hubert at Jul 05, 2023, 07:54 AM

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Solange

1 months ago

Ah, the old 'recruit your way to riches' scheme. I wonder if they offer a frequent flyer program for all those recruiters climbing the pyramid. C is the way to go, my friends.

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Emilio

1 months ago

If it looks like a pyramid, smells like a pyramid, and promises you the world for just a small investment... it's probably a pyramid scheme. C marks the spot, folks!

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Claribel

3 days ago

A) When it asks its agents to buy product and marketing material up front.

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Nickie

1 months ago

I'm gonna have to go with C on this one. Anything that prioritizes recruitment over actual product sales is a big red flag in my book. Seems like a classic pyramid scheme to me.

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Rebeca

1 months ago

Ah, the age-old pyramid scheme dilemma. I say, if it quacks like a duck and walks like a duck, it's probably a pyramid scheme. C all the way, my friends!

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Catalina

1 days ago

I agree, C does seem like a red flag.

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Oneida

2 months ago

Hmm, this is a tricky one. I'm not sure if I agree with C though. What if the training programs really do teach effective selling techniques? Maybe D is the right answer here.

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Dannette

3 days ago

C) When it offers its agents more reward for recruiting other agents than for selling its product.

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Lashawna

4 days ago

B) When it offers returns on its agents' investments that seem remarkable.

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Carissa

10 days ago

A) When it asks its agents to buy product and marketing material up front.

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Becky

2 months ago

This question seems pretty straightforward. I think the correct answer is C - when the rewards for recruiting agents outweigh the rewards for actually selling the product, that's a clear sign of a pyramid scheme.

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