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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17 days ago

I think H becomes a pyramid selling fraud when it offers more reward for recruiting agents than for selling the product.

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