IMA CMA Part 2: Strategic Financial Management Sample Questions:

1. 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 B only
C) Continue to make and sell Product A only.
D) Continue to make and sell both Product A and Product B

2. Calculate Guda's marginal cost of capital- Show your calculations.
Apex Manufacturing lnc. (AMI) is a Canada-based company that manufactures a manufactures and unique part for aircrafts. It has few competitors in the market. The company is exposed to exchange rate risk because about 90% of its products are exported to the U.S, and most of its sales contracts are in U.S. dollars. AMI has the capacity to manufacture 1,500 units of the part per year. For the year just ended. AMI manufactured and sold 1,000 units. The operating results are shown below.

Recently, A new customer made a one-area order of 500 units of the part at $1.200 per unit. The CTO asked the controller to analyze this offer. AMI is considering adjusting its sales price next year in a recent meeting, the CFO suggested to use the market-based approach for pricing decisions, bat the controller insisted that the cost-based approach is more favorable to the company.

3. Which one of the following statements regarding portfolio diversification is not correct?

A) A well diversified portfolio should include individual stock investments having a balance of positive and negative betas.
B) A well diversified portfolio can minimize unsystematic risk
C) The standard deviation of a well diversified portfolio's percentage returns should be approximately equal to the standard deviation of the entire stock market's percentage returns.
D) A well diversified portfolio can eliminate systematic risk.

4. Which one of the following moral philosophies states that the morality of an action is inherent and not based on the consequences of the action?

A) Relativism
B) Teleology
C) Deontology
D) Utilitarianism

5. Risk maps are used in companies' enterprise risk management system because risk maps

A) are a generic set of risks for the company's industry that can then be used as a foundation for further risk-identification techniques to specify the risks relevant for the company.
B) rank risks Based on the potential loss that could occur it a risk were to materialize
C) compares the impact of a risk and the likelihood of occurrence to provide a qualitative assessment of the risk
D) provide a quantitative tool that measures the probability of occurrence and the potential impact to calculate a potential loses

Solutions: