IMANET IMANET-CMA Online Practice Questions and Exam Preparation

IMANET IMANET-CMA Online Questions & Answers

• Question 851:

  Hendrix, Inc. is interested in purchasing a $100 U.S. Treasury bill andwas presented with the following options:

  

  If Hendrix wishes to buy the Treasury bill at the lowest purchasing price, which option should be chosen, assuming a 360-day year?

  A. Option 1. B. Option 2.
  C. Option 3.
  D. Option 4.
  B

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  Explanation

  To determine the amount of interest the lender will earn, the 3. 5% discount rate is multiplied by the face amount of the Treasury bill. The interest on this Treasury bill is $3. 50 (3. 5% x 1 year x $100); thus, the 1purchase price is $96. 50 ($100 -$3. 5).

• Question 852:

  A major justification for investments in computer-integrated manufacturing (CIM) projects is

  A. Reduction in the costs of spoilage, reworked units, and scrap.
  B. Lower book value and depreciation expense for factory equipment.
  C. Increased working capital.
  D. Stabilization of market share.
  A. Reduction in the costs of spoilage, reworked units, and scrap.

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  Explanation

  Automating and computerizing production processes requires a substantial investment in fixed assets and an increase in risk because of greater fixed costs. CIM also necessitates an increase in software costs and extensive worker retraining. However, the costs of spoilage, rework, and scrap are reduced along with labor costs. The qualitative advantages of CIM are increased flexi lily, shorter manufacturing lead time, quicker development of new products, better product delivery and service, faster response to market changes1 and improved competitiveness.

• Question 853:

  The drivers of customer equity are value equity, brand equity, and relationship equity. The sub driver most closely related to brand equity is

  A. Quality.
  B. Price.
  C. Customer awareness.
  D. Loyalty programs.
  C. Customer awareness.

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  Explanation

  Brand equity is a subjective evaluation. Sub drivers are the customer's awareness of 1 and attitude toward, the brand and the customer's belief about brand ethics. Brand equity is most significant when the product is not differentiated but has emotional appeal.

• Question 854:

  Which barrier to global competition limits global procurement and achievement of economies of scale?

  A. The need for a direct sales force.
  B. Product needs.
  C. Resource impediments.
  D. Sensiflvityto lead times.
  B. Product needs.

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  Explanation

  Product needs may differ from country to county because of culture, climate, degree of economic development, income, legal requirements, technical standards, and other factors. This barrier limits the ability to achieve economies of scale in global procurement. The height of the barrier depends on the cost of product modifications.

• Question 855:

  A firm expands into international markets to

  A. Be in foreign markets
  B. Eliminate foreign competition
  C. Pursue new, higher-profit opportunities
  D. Preclude piracy of its products
  C. Pursue new, higher-profit opportunities

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  Explanation

  A firm may decide to go abroad for many reasons, for example, to respond to a competitive challenge in its home country by another global firm, to pursue opportunities yielding grater profits, to achieve economies of scale, to diversity, or to follow customers who needs international service.

• Question 856:

  An organization's policies and producers are part of its overall system of internal controls. The control function performed by policies and procedures is?

  A. Feedforward control
  B. Implementation control
  C. Feedback control
  D. Application control
  A. Feedforward control

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  Explanation

  Feedfroward control anticipates and prevents problem. Policies and procedures serve as feed-forward controls because they provide guidance on how an activity should be performed to best insure that an objective is achieved.

• Question 857:

  The par value of a common stock represents

  A. The estimated market value of the stock when it was issued.
  B. The liability ceiling of a shareholder when a company undergoes bankruptcy proceedings.
  C. The total value of the stock that must be entered in the issuing corporation's records.
  D. A theoretical value of $100 per share of stock with any differences entered in the issuing corporation's records as discount or premium on common stock
  B. The liability ceiling of a shareholder when a company undergoes bankruptcy proceedings.

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  Explanation

  Par value represents a stock's legal capital. It is an arbitrary value assigned to stock before it is issued. Par value represents a shareholder's liability ceiling because, as long as the par value has been paid in to the corporation, the shareholders obtain the benefits of limited liability.

• Question 858:

  If k is the cost of debt and t is the marginal tax rate, the after-tax cost of debt. kk, is best represented by the formula

  A. ki = k /t
  B. ki=k/ .(1--t)
  C. ki=k(t)
  D. kj=k(1--t)
  D. kj=k(1--t)

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  Explanation

  The after-tax cost of debt is the cost of debt times the quantity one minus the tax rate. For example, the after-tax cost of a 10% bond is 7% [10% x (1 -- 30%)] if the tax rate is 30%.

• Question 859:

  Under which one of the following targeting strategies does a firm attempt to serve all customer groups with all the products they might need?

  A. Single-segment concentration.
  B. Market specialization.
  C. Pull market coverage.
  D. Product specialization
  C. Pull market coverage.

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  Explanation

  Pull market coverage provides all the products wanted by all customer groups. This approach is possible only for a very large firm.

• Question 860:

  The concurrent action of basic competitive forces as defined by Porter's model determines

  A. The long-term profitability and the competitive intensity of the industry.
  B. The entrance barriers that potential players must face to get into the industry.
  C. The rivalry inside the industry.
  D. The strategy that a firm should follow to achieve its objectives.
  A. The long-term profitability and the competitive intensity of the industry.

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  Explanation

  Michael E. Porter, a leader in the field of strategic management, has developed a comprehensive model of the structure of industries and competition. One feature is his analysis of the five competitive forces that determine long-term profitability measured by long-term return on investment. This analysis determines the attractiveness of an industry.