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IMA CMA Part 2: Strategic Financial Management Sample Questions:

1. 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) Products B
B) Products A
C) Product C
D) Product D


2. In an Enterprise Risk Management environment, which one of the following is the best example of risk sharing?

A) Outsourcing business processes
B) Self-insuring against loss
C) Reallocating capital among operating units
D) Establishing operational limits


3. Explain now QDD's share repurchase plan would affect each of the following measures EPS, the degree of operating leverage, and the interest coverage ratio No calculations required 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


4. 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) $90.000
B) ($35,000)
C) $50.000
D) $5,000


5. Alliantz Company, a USA-based manufacturer needs to set up a hedge to protect against dollar exchange rate devaluation. The protection is necessary (or an open balance of $2 478.450 Payment is to be settled in a rare currency 40 days from today excluding transaction fees which investment instrument would be used to provide the best hedge?

A) Stock options
B) Market-traded futures
C) Currency warrant
D) Forward agreement


Solutions:

Question # 1
Answer: D
Question # 2
Answer: A
Question # 3
Answer: Only visible for members
Question # 4
Answer: D
Question # 5
Answer: D

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