IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 131:

  In a market-share analysis, the relative market share equals

  A. Sales divided by total market sales
  B. Sales divided by sales of largest competitor
  C. Sales divided by the served market
  D. Firm customers divided by all customers
  B. Sales divided by sales of largest competitor

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  Explanation

  The relative market share measures a firm's competitive position. If it exceeds 1.0, the firm is the market larder. A rising measurement signifies that the firm is gaining.

• Question 132:

  A marketer states a value proposition to

  A. Create customer needs.
  B. Influence customer wants.
  C. Make the offering tangible.
  D. Define customer value and customer cost.
  B. Influence customer wants.

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  Explanation

• Question 133:

  In a product's life cycle, the first symptom of the decline stage is a decline in the

  A. Firm's inventory levels
  B. Product's sales
  C. Product's production cost
  D. Product's prices
  B. Product's sales

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  Explanation

  The sales of most product types and brands eventually decrease permanently. This decline may be slow or rapid. This first symptom of the decline stage of a product's life cycle triggers such other effects as price cutting, narrowing of the product line, and reduction in promotion budgets.

• Question 134:

  Edwards Manufacturing Corporation uses the standard economic order quantity' (EOQ) model. If the EOQ for Product A is 200 units and Edwards maintains a 50-unit safety' stock for the item, what is the average inventory' of Product A?

  A. 250 units.
  B. 150 units.
  C. 125 units.
  D. 100 units.
  B. 150 units.

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  Explanation

• Question 135:

  All of the following are valid reasons flora business to hold cash and marketable securities except to

  A. Sati's N compensating balance requirements.
  B. Maintain adequate cash needed for transactions.
  C. Meet future needs.
  D. Earn maximum returns on investment assets.
  D. Earn maximum returns on investment assets.

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  Explanation

  A company will hold cash and marketable securities to facilitate business transactions; cash is a medium of exchange. Cash and near-cash items are also held to meet future needs, to satiety compensating balance requirements imposed by lenders, and to provide a precautionary balance for securely purposes. Cash is usually not held in an attempt to earn maximum returns on investment because cash and marketable securities are not 1usually the hajjes paying investments.

• Question 136:

  Alberto Corp. has common and preferred shares outstanding with the following characteristics:

  

  Alberto Corp. has earnings per share of

  A. $2. 67
  B. $3. 33
  C. $4. 00
  D. $5. 00
  C. $4. 00

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  Explanation

  EPS equals the income available for distribution to common shareholders divided by the number of common shares outstanding, or $4. 00 [($250,000 NI - $50,000 preferred dividends) ?50,000 common shares]

• Question 137:

  Hagar Company's bank requires a compensating balance of 20% on a $100,000 loan. If the stated interest on the loan is 7%, what is the effective cost of the loan?

  A. 5. 83%
  B. 7. 00%
  C. 8.40%
  D. 8.75%
  D. 8.75%

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  Explanation

• Question 138:

  A preferred stock is sold for $101 per share, has a face value of $100 per share, underwriting fees of $5 per share, and annual dividends of $10 per share If the tax rate is 40%, me cost of funds (capital) for the preferred stocks

  A. 4. 2%
  B. 6. 2%
  C. 10.0%
  D. 10.4%
  D. 10.4%

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  Explanation

  Because the dividends on preferred stock are not deductible for tax purposes, the effect of income taxes is ignored. Thus, the relevant calculation is to divide the $10 annual dividend by the quantity of funds received at the time the stock is issued. In this case, the funds received equal $96 ($101 selling price -- $5 underwriting fee). Thus, the cost of capital is 10.4% ($10 + $96)

• Question 139:

  The length of time required to recover the initial cash outlay of a capital project is determined by using the

  A. Discounted cash flow method.
  B. Payback method.
  C. Weighted net present value method.
  D. Net present value method.
  B. Payback method.

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  Explanation

  The payback method measures the number of years required to complete the return of the original investment. This measure is computed by dividing the net investment by the average expected cash inflows to be generated, resulting in the number of years required to recover the original investment. The payback method gives no consideration to the time value of money, and there is no consideration of returns after the payback period.

• Question 140:

  Assume that a probability can be assigned to each possible outcome of a decision, the outcomes are theoretically infinite, and the graph describing the probabilities is bell- shaped, symmetrical,and centered about the mean. this probability distribution is best described as

  A. Discrete and normal
  B. Discrete but not normal
  C. Continuous and normal
  D. Continuous but not normal
  C. Continuous and normal

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  Explanation

  A probability distribution is the set of all possible outcomes of a decision, with a probability assigned to each outcome. for example, a simple probability distribution might be defined for the possible returns on a stock investment. a different return could be estimated for each of a limited number of possible states of the economy, and a probability could be determined for each state. Such a probability distribution is discrete because the outcomes are limited. a continuous distribution is one for which outcomes are theoretically infinite. the normal distribution is the best-known continuous distribution. the normal distribution has a symmetrical, bell-shaped curve centered about the mean.