IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 831:

  The marketing organization may take which forms?

  l.

  A cross-disciplinary team ll. A sales department team lll. Separate sales and marketing departments lV. Sales and marketing reporting to a vice-president

  A. l and lV only
  B. l and ll only
  C. ll, lll, and lV only
  D. l, ll, ll, iV
  D. l, ll, ll, iV

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  Explanation

  The marketing organization should be able to implement the marketing plan. The following are types of marketing organizations: sales department only, sale department with some marketing functions, such as advertising and research, marketing department separate from sales; marketing and sales departments reporting to a vice-president of marketing and sales, the same, except that everyone is customer- and market-centered, and process and outcome organizations, with departments replaced by cross-disciplinary teams managed by process leaders.

• Question 832:

  The element of the marketing communications mix that provides incentives to buy is

  A. Advertising.
  B. Public relations.
  C. Personal selling.
  D. Sales promotion's
  D. Sales promotion's

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  Explanation

  Sales promotion offers customers short-term incentives to try or purchase the offering. Some possible platforms are coupons, samples, premiums, gifts, contests (e.g., lotteries), trade-ins, no-i interest financing, and rebates. Sales promotion provides some additional customer value in exchange for inviting immediate action and draws attention to the offering.

• Question 833:

  Enert, Inc.'s current capital structure is shown below. This structure is optimal, and the company wishes to maintain it.

  Debt 25%

  Preferred equity 5

  Common equity 7 0

  Enert's management is planning to build a $75 million facility that will be financed according to this desired capital structure. Currently, $15 million of cash is available for capital expansion. The percentage of the $75 million that will come from

  a new issue of common stock is

  A. 52. 50%.
  B. 50.00%.
  C. 7000%.
  D. 5600%.
  D. 5600%.

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  Explanation

  Because $15 million is already available, the company must finance $60 million ($75 million -- $15 million).Of this amount, 70%, or $42 million, should come from the issuance of common stock to maintain the current capital structure. The $42 million represents 56% of the total $75 million.

• Question 834:

  A firm that sells in foreign markets should consider all aspects of how products move from me firm to ultimate users. Where in the toile charnel are marketing mix decisions most likely made?

  A. Export department of the seller firm.
  B. Import department of the barer firm.
  C. Channels within nations.
  D. Charnels between nations.
  A. Export department of the seller firm.

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  Explanation

  Distribution channels are a necessity to ensure that goods are successful transferred from the production facility end users. These channels include three district links that must work smoothly together. I,. The international marketing headquarters (export department of international division) is where decisions are made with regard to the subsequent channels and other aspects of the marketing mix

  2. Channels between nations carry goods to foreign borders,. They include air, land, sea, or rail transportation channels. At this stage, in addition to transportation methods, intermediaries are selected (e g.' agents or trading companies) and

  financing and ask management decisions are reached.

  3, Channels within nations take the goods from the border or entry point to the ultimate users of the products Among nations, the number of levels of distribution, the types of channels, and the size of retag*leers vary substantially.

• Question 835:

  A 10% stock dividend most likely

  A. Increases the size of the firm.
  B. Increases shareholders' wealth.
  C. Decreases future earnings per share.
  D. Decreases net income.
  C. Decreases future earnings per share.

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  Explanation

  A stock dividend is a transfer of equity from retained earnings to paid-in capital. The debit is to retained earnings, and the credits are to common stock and additional paid-in capital. Additional shares are outstanding following the stock dividend, but every shareholder maintains the same percentage of ownership. In effect, a stock dividend divides the pie (the corporation) into more pieces, but the pie is still the same size. Hence, a corporation will have a lower EPS and a lower bookvalue per share following a stock dividend, but every shareholder will be just as well off as previously. A stock dividend has no effect except on the composition of the shareholders' equity section of the balance sheet.

• Question 836:

  When a decision maker is faced with a decision and the probabilities of various outcomes are known, the situation is said to be decision making

  A. Under risk.
  B. Under uncertainly.
  C. Under certainly.
  D. Through satisfying.
  A. Under risk.

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  Explanation

  Decision making under risk entails consideration of multiple possible future states of nature for each choice. The decision is under risk if a probability distribution for these states can be estimated. Thus, the states of nature will be mutually exclusive, and the sum of their probabilities will equal 1.0. Riskincreases asthevariabililyof outcomes become greater. In practice, however, the terms risk and uncertainly are often treated as synonyms.

• Question 837:

  Which of the following is not a characteristic of a multinational strategy adopted by a global marketing organization?

  A. The product is customized (or each market.
  B. Central control of the production process is strong.
  C. The strategy is most effective when there are strong differences between countries.
  D. Production costs incurred are higher than in a global or global strategy.
  B. Central control of the production process is strong.

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  Explanation

  A multinational strategy adopts a portfolio approach, lts emphasis is on national markets because the need for global integration is not strong. The product is customized for each market and therefore incurs higher production costs. Decision making is primarily local with a minimum of central control. The strategy is most effective given large differences between countries, Also, exchange rate risk is reduced when conducting business in this manner.

• Question 838:

  Lawson. Inc. is expanding its manufacturing plant, which requires an investment of $4 million in new equipment and plant modifications. Lawson's sales are expected to increase by $3 million per year as a result of the expansion. Cash investment in current assets averages 30% of sales; accounts payable and other current liabilities are 10% of sales. What is the estimated total investment for this expansion?

  A. $3. 4 million.
  B. $4. 3 million.
  C. $4. 6 million.
  D. $5. 2 million.
  C. $4. 6 million.

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  Explanation

  The investment required includes increases in working capital (e.g.. additional receivables and inventories resulting from the acquisition of a new manufacturing plant). The additional working capital is an initial cost I of the investment, but one that will be recovered (i.e.. it has a salvage value equal to its initial cost). Lawson can use current liabilities to fund assets to the extent of 10% of sales. Thus, the total initial cash outlay will be $46 million ($4 million + [(30% -- 10%) x $3 million sales].

• Question 839:

  Randy, Inc. can issue 3-month commercial paper with a face value of $1, 500,000 for $1 ,450,000. Transaction costs will be $1,500. The effective annualized percentage cost of the financing, based on a 360-day year, will be

  A. 345%
  B. 3. 56% 0. 14. 22%
  C. 13. 79%
  C. 13. 79%

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  Explanation

  The total cost to the company will be $51,500 ($50000 discount+ $1,500 of transaction costs), and the net amount available will be $1,448,500. The annualized amount of the costs is $206,000 ($51,500 x 4). Accordingly, the annual interest cost will be 14. 22% ($206,000 + $1,448,500).

• Question 840:

  Cutler Publishing is considering a change in its credit terms from n/20 to 3/10, n/20. The company's budgeted sales for the coming year are $20,000,000, of which 80% are expected to be made on credit. If the new credit terms are adopted, Cutler management estimates that discounts will be taken on 60% of the credit sales; however, uncollectible accounts will be unchanged. The new credit terms will result in expected discounts taken in the coming year of

  A. $288,000
  B. $480,000
  C. $360,000
  D. $600,000
  A. $288,000

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  Explanation

  If 80% of the $20,000,000 of sales are on credit, $16,000,000 of sales will be subject to the discount. If discounts are taken on 60% of credit sales, the expected discount will be $288,000 [($16,000,000 x 60%) x3%