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IMA CMA Part 2: Strategic Financial Management Sample Questions:
1. Risk maps are used in companies' enterprise risk management system because risk maps
A) provide a quantitative tool that measures the probability of occurrence and the potential impact to calculate a potential loses
B) 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.
C) compares the impact of a risk and the likelihood of occurrence to provide a qualitative assessment of the risk
D) rank risks Based on the potential loss that could occur it a risk were to materialize
2. A corporation shows the following on its financial statements (in millions).
The corporation has a financial leverage ratio of
A) 2.00
B) 0.06
C) 3.60
D) 0.50
3. Sigma industries is considering purchasing Lambda Products in a cash transaction Sigma financial analysts Dave conducted an extensive amount of negotiation and due diligence and nave summarized the following financial information for management.
* Assets having a 10-year remaining life can be acquired for $22 million
* Assets are to De depreciated over their remaining life on a straight-line basis for Doth book and tax purposes
* Current liabilities of Lambda amounting to S3 million must be assumed by Sigma
* Lambda operations are expected to produce annual pre-tax cash Don of S7 million for the remaining 10 years of operation
* A16% return on investment is required by Sigma for acquisitions of this type
* Sigma's marginal Income tax rate is 35%
What is the net present value to Sigma of the Lambda acquisition rounded to the nearest thousand?
A) $6, 921,000)
B) $712,000
C) $3,712,000
4. Genco Healthcare has asked ns controller to summarize the company's financial performance for the past two years. The accountant provided the following two years financial ratios for reference.
A) Less liquid mote profitable more solvent
B) Less liquid mote profitable less solvent
C) More liquid, less profitable mote solvent
D) More Liquid Less profitable less solvent
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) Forward agreement
B) Stock options
C) Currency warrant
D) Market-traded futures
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: D | Question # 3 Answer: B | Question # 4 Answer: B | Question # 5 Answer: A |

