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IMA CMA-Strategic-Financial-Management Certification Exam is a highly respected certification in the field of financial management. CMA Part 2: Strategic Financial Management Exam certification is recognized globally, and it is highly valued by employers in the finance industry. The CMA certification demonstrates to employers that a candidate has a deep understanding of financial management principles and is capable of making sound financial decisions.
NEW QUESTION # 58
Define the term structure of interest rates and explain now it could impact QDD's objective of obtaining the lowest coupon rate Essay Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows
QDD's stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company "s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3% risk free rate of return QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock.
QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments.
Answer:
Explanation:
See the explanation for the answer.
Explanation
* A callable bond allows companies to pay off their debt early and benefit from favorable interest rate drops
* A capable bono benefits the issuer and so investors of these bonds ate compensated vutn a more attractive interest rate than on otherwise similar non-callable bonds However callable bones are more expensive The term structure of interest rates reflects the expectations of market participants about future changes in interest rates and their assessment of monetary policy conditions in general terms yields increase in line with maturity, giving rise to an upard-sloping or normal yield curve
NEW QUESTION # 59
Below is the income statement and balance sheet for a retail corporation.
What is the corporation's debt to total capital in year 2?
- A. 71%
- B. 6%
- C. 41%
- D. 19%
Answer: D
NEW QUESTION # 60
All of the following describe ethical leaders except
- A. leaders who demonstrate high ethical standards
- B. supportive leaders who encourage employees to adhere to company policy
- C. flexible leaders how new ethical behavior to be negotiable
- D. dedicated leaders who can keep promises and commitment
Answer: C
NEW QUESTION # 61
Each of the following describes a limitation of financial statement analysis except
- A. financial statements may include significant estimated items which may distort results
- B. it Is difficult to compare one company with another even within the same industry due to differences in accounting principles used.
- C. financial statement analysis is based on historical costs rattier man current costs which can lead to distortions in measurement
- D. financial statement analysis can use more than one measure to examine the interrelationships among data
Answer: D
NEW QUESTION # 62
London Corporation has in the following cost structure for two of its product.
Assume that me current sales level is 15,000 units of Product A and 5,000 units of Product B Using cost-volume-profit analysis which of the following courses of action would maximize profit in the short term?
Assume that fixed costs are sunk costs in the short term.
- A. Discontinue making and selling Doth products
- B. Continue to make and sell Product A only.
- C. Continue to make and sell Product B only
- D. Continue to make and sell both Product A and Product B
Answer: B
NEW QUESTION # 63
Which one of the following statements regarding working capital management is not correct?
- A. An attempt to minimize carrying costs and shortage costs associated with inventory levels is an objective of working capital management
- B. Increasing costs associated with the manufacture and sale of products will not impact the short-term management of working capital
- C. The cash, inventory accounts payable and accounts receivable components of working capital are constantly changing during the operating cycle
- D. Seasonal demand for me products can cause working capital problems that must De anticipated and managed
Answer: B
NEW QUESTION # 64
A company plans to purchase equipment for $110 000. The equipment is expected to generate an annual cash flow o( $44 500 (of the next three years The company has a predetermined hurdle rate of 9% Using the internal rate of return (IRR). should the company purchase this equipment?
- A. No, the IRR is less than the hurdle rate
- B. Yes, the IRR is greater than the hurdle rate
- C. Yes, the IRR is less than the hurdle rate
- D. No, the IRR is greater than the hurdle rate
Answer: B
NEW QUESTION # 65
Plenary Inc specializes in overnight package delivery. Total packages delivered last year were 10 000.000. and this quantity is expected to remain unchanged in the coming year. Unit contribution margin is $4,50 and total fixed costs are S40.000,000. The firm's 300 delivery truck drivers are seeking a S10 000 raise in annual salary In addition to a current base salary of $45 000 per year, the drivers receive a commission of $0 50 per package delivered If the firm grants the $10,000 salary increase to each driver and seeks to maintain the same level of pre-tax operating profit what is the maximum amount of commission the firm can pay its drivers per package delivered?
- A. $0.30
- B. $0.20
- C. $0.35
- D. $0.0
Answer: B
NEW QUESTION # 66
Sunnyvale Gas Company had a $50 million issue of 30-year mortgage bonds issued at par 10 years ago The coupon rate on the bonds is 15% and Interest is payable semi-annually on March 1 and September 1. The bonds are currently trading at SI 300. The can provision of the issue states that the bonds are callable after the S-year deferral period at 108 plus accrued interest. If Sunnyvale calls the bonds effective June 1 what is the cash payment, ignoring taxes, to the bondholders?
- A. $57 750 000
- B. $55 875 000
- C. $66,875,000
- D. $51875 000
Answer: A
NEW QUESTION # 67
if a company increases the price of its product from $3010 $35, demand would decrease from 30, 000 units to
20.000 units. What is the price elasticity of demand for the company using the midpoint formula?
- A. 0.5
- B. 0.4
- C. 2.7
- D. 2.0
Answer: C
NEW QUESTION # 68
A group of nations is considering me formation of a cartel associated with the manufacture and distribution of a product that they each export. Which one of the following outcomes would not be consistent with me formation of a carter?
- A. An increase in the output of the manufactured product
- B. An increase in the selling price of the manufactured product
- C. An increase m the net profits for each of the individual cartel members
- D. A selling price where marginal revenue equals marginal cost
Answer: A
NEW QUESTION # 69
The human resources manager of BankUS has noted mat me company s employee turnover has increased. He has also had his budget cut, and will have to reduce training for new associates. He has a meeting scheduled with the CFO lo go over risks that his department faces. What should the human resources manager tell the CFO about risk?
- A. He should notify the CFO of a potential internal factor risk
- B. He should notify the CFO of a potential operations risk
- C. He should notify the CFO of a need for additional funding
- D. Me does not need to notify me CFO of a potential risk
Answer: B
NEW QUESTION # 70
Essentials inc. operates two segments. Segment A and Segment B information about the revenues and costs for Essentials tot the previous year (by segment) is shown below The above analysis shows that Segment A is not profitable if Segment A is dropped, the revenues associated with the account will be lost and the related variable costs win be eliminated Also, the space freed by this product line will be rented for $40.000. The operating profit (loss) after dropping Segment A will be
- A. ($35,000)
- B. $90.000
- C. $5,000
- D. $50.000
Answer: C
NEW QUESTION # 71
A furniture retail company uses the LIFO inventory method Due to the nigh inflation rate in me past year, the company's
- A. net income may be understated
- B. quick ratio may be understated
- C. quick ratio may be overstated
- D. current ratio may be overstated
Answer: A
NEW QUESTION # 72
On January 1, 2008 the exchange rate between the U S dollar (S) and Indian Rupee (Rs) was $t = Rs 39. 2676.
On January 1, 2009 the rate was Rs 1 = $0,0205. Based only on the relative currency appreciation or depreciation, which country's exports would likely have increased?
- A. Neither India or U.S
- B. U.S
- C. Both India and U.S
- D. India
Answer: B
NEW QUESTION # 73
Custom Ceramics produces two hand-painted items a large bowl and a large platter. Relevant information for each of these items is shown below
- A. The company should produce only bowls because the sales price per Bowl is higher
- B. The company should produce only platters because the variable cost per platter is lower
- C. The company should produce only bowls because the contribution margin per bowl is higher.
- D. The company should produce only platters because the contribution margin per painting hour is higher
Answer: D
NEW QUESTION # 74
A company has incurred $2,500 to produce its four products. These products can either be sold as is or processed further. The selling prices and additional costs necessary to finish these products ace shown below
- A. Product D
- B. Products A
- C. Product C
- D. Products B
Answer: A
NEW QUESTION # 75
Identify and describe two defenses Blue Moon could use if it does not wish to be acquired by Guda.
Essay
Food Depot Ltd, (FDL) is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants, FDL has been profitable in recent years and has a very strong cash position. FDL's newest division. Food_TO-Go is an online meal ordering and delivery platform acquired by FDL two year ago.
In 20X7, sales for the entire company were $1 billion, with 50% of the business coming from the Airline Catering division. FDL is the country 's leading airline catering services provider and control 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-division only contribution 5% of FDL's total sales in 20X7 and is far behind in competing for marketing for market share of the online meal ordering and delivery industry, it is estimated that Food-To-Go's sales were only 20% of the industry leader's sales. However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
Susan Willey, the head of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company. Wiley argues that ber division bad the highest ROI in 20X7, and it deserves more capital finding. FDL's requested rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follow (in $ millions)
Answer:
Explanation:
See the explanation for the answer.
Explanation
They can simply revalue their assets and hence ask for a higher price for their company or they are structure their financing structure by either issuing debts or reducing me equity by paying a special one off dividend.
NEW QUESTION # 76
K Malone is a successful entrepreneur, Currently she is considering investing in a capital protect, which would benefit tourism in North Caroina Because of tourism, the State of North Carolina is willing to lent) her
$150,000 at a rate of 5%. well below the market rate Her estimated net cash flows for the 3-year lifetime of the project are S15 000 $89,000 and $60,000 respectively Recommend whether or not Malone should undertake this project.
- A. She should not undertake this protect because the net present value (NPV) is ($3.157)
- B. She should not undertake this project because the net present value NPV is ($14.051).
- C. She should undertake this project because the net present value (NPV) is $31,022.
- D. She should undertake this project because the present value (PV) of this project is $146,843
Answer: B
NEW QUESTION # 77
As the number of stocks in a portfolio increases, unsystematic risk
- A. decreases and systematic risk decreases
- B. increases, and systematic risk increases
- C. decreases and systematic risk does not change
- D. increases, and systematic risk does not change
Answer: C
NEW QUESTION # 78
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IMA CMA-Strategic-Financial-Management (CMA Part 2: Strategic Financial Management) Exam is one of two exams candidates must pass in order to earn the Certified Management Accountant (CMA) certification. CMA-Strategic-Financial-Management exam covers advanced financial management topics and focuses on strategic decision-making. It is designed to test candidates' knowledge and skills related to financial statement analysis, corporate finance, risk management, investment decisions, and professional ethics.
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