CMA-Strategic-Financial-Management CMA Part 2: Strategic Financial Management Exam Dumps

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Sample Question 4

Discuss whether the demand for OLI’s new business English course is elastic and explainhow OLI can use this information in determining the product price.EssayOnline Learning Inc. lOLI) is a privately-held company based in the IUC that specializes inproviding online courses in English as a Second Language (ESL). OLI is trying to set up anew sales office in a foreign country. It needs a business license to operate in that country.The license normally lakes six months to obtain. An official of that country said that hecould expedite the process for a fee of €300.OLI estimates the new sales office can bring €300,000 incremental profit annually OLI hasjust launched a new online 40-houi course to help adult ESL learners master basicbusiness English. The price of the new course is €500 per student, the variable cost is€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent€200.000 to develop the new course before launching it. There are many online course providers in the marketplace, and each has its own feature However, OLI's highly qualifiedstaff and good reputation have enabled it to charge a premium price compared to its majorcompetitors. Recent market research indicates that if OLI raises the price of its newbusiness English course by 10V the student enrollment would decrease by 5V A regionalairlines company in Asia has approached OLI and offered to enroll 1.000 of its employeesin the new course if OLI would agree to a special price of €350 per employee If OLI acceptsthis offer, an additional €10,000 onetime cost would be required to temporally expand itscapacity to accommodate the new students.


Sample Question 5

Determine whether me €300 fee is a facilitating paymentEssayOnline Learning Inc. lOLI) is a privately-held company based in the IUC that specializes in providing online courses in English as a Second Language (ESL). OLI is trying to set up anew sales office in a foreign country. It needs a business license to operate in that country.The license normally lakes six months to obtain. An official of that country said that hecould expedite the process for a fee of €300.OLI estimates the new sales office can bring €300,000 incremental profit annually OLI hasjust launched a new online 40-houi course to help adult ESL learners master basicbusiness English. The price of the new course is €500 per student, the variable cost is€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent€200.000 to develop the new course before launching it. There are many online courseproviders in the marketplace, and each has its own feature However, OLI's highly qualifiedstaff and good reputation have enabled it to charge a premium price compared to its majorcompetitors. Recent market research indicates that if OLI raises the price of its newbusiness English course by 10V the student enrollment would decrease by 5V A regionalairlines company in Asia has approached OLI and offered to enroll 1.000 of its employeesin the new course if OLI would agree to a special price of €350 per employee If OLI acceptsthis offer, an additional €10,000 onetime cost would be required to temporally expand itscapacity to accommodate the new students.


Sample Question 6

Explain why facilitating payments can create possible ethical and legal issues tor acompanyEssayOnline Learning Inc. lOLI) is a privately-held company based in the IUC that specializes inproviding online courses in English as a Second Language (ESL). OLI is trying to set up anew sales office in a foreign country. It needs a business license to operate in that country.The license normally lakes six months to obtain. An official of that country said that hecould expedite the process for a fee of €300.OLI estimates the new sales office can bring €300,000 incremental profit annually OLI hasjust launched a new online 40-houi course to help adult ESL learners master basicbusiness English. The price of the new course is €500 per student, the variable cost is€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent€200.000 to develop the new course before launching it. There are many online courseproviders in the marketplace, and each has its own feature However, OLI's highly qualifiedstaff and good reputation have enabled it to charge a premium price compared to its majorcompetitors. Recent market research indicates that if OLI raises the price of its newbusiness English course by 10V the student enrollment would decrease by 5V A regionalairlines company in Asia has approached OLI and offered to enroll 1.000 of its employeesin the new course if OLI would agree to a special price of €350 per employee If OLI acceptsthis offer, an additional €10,000 onetime cost would be required to temporally expand itscapacity to accommodate the new students.


Sample Question 7

Identify the market structure in which OLI operates and explain how OLi's pricing isaffected by this mantel structureEssayOnline Learning Inc. lOLI) is a privately-held company based in the IUC that specializes inproviding online courses in English as a Second Language (ESL). OLI is trying to set up anew sales office in a foreign country. It needs a business license to operate in that country.The license normally lakes six months to obtain. An official of that country said that hecould expedite the process for a fee of €300.OLI estimates the new sales office can bring €300,000 incremental profit annually OLI hasjust launched a new online 40-houi course to help adult ESL learners master basicbusiness English. The price of the new course is €500 per student, the variable cost is€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent€200.000 to develop the new course before launching it. There are many online courseproviders in the marketplace, and each has its own feature However, OLI's highly qualifiedstaff and good reputation have enabled it to charge a premium price compared to its majorcompetitors. Recent market research indicates that if OLI raises the price of its newbusiness English course by 10V the student enrollment would decrease by 5V A regionalairlines company in Asia has approached OLI and offered to enroll 1.000 of its employeesin the new course if OLI would agree to a special price of €350 per employee If OLI acceptsthis offer, an additional €10,000 onetime cost would be required to temporally expand itscapacity to accommodate the new students.


Sample Question 8

Explain me concept of relevant cost in the season-making process and discuss whateverthe €200, 000 course development coil is relevant to OLi's price decisions in future yearsEssayOnline Learning Inc. lOLI) is a privately-held company based in the IUC that specializes inproviding online courses in English as a Second Language (ESL). OLI is trying to set up anew sales office in a foreign country. It needs a business license to operate in that country.The license normally lakes six months to obtain. An official of that country said that he could expedite the process for a fee of €300.OLI estimates the new sales office can bring €300,000 incremental profit annually OLI hasjust launched a new online 40-houi course to help adult ESL learners master basicbusiness English. The price of the new course is €500 per student, the variable cost is€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent€200.000 to develop the new course before launching it. There are many online courseproviders in the marketplace, and each has its own feature However, OLI's highly qualifiedstaff and good reputation have enabled it to charge a premium price compared to its majorcompetitors. Recent market research indicates that if OLI raises the price of its newbusiness English course by 10V the student enrollment would decrease by 5V A regionalairlines company in Asia has approached OLI and offered to enroll 1.000 of its employeesin the new course if OLI would agree to a special price of €350 per employee If OLI acceptsthis offer, an additional €10,000 onetime cost would be required to temporally expand itscapacity to accommodate the new students.


Sample Question 9

Should OLI accept the proposal from the regional airline? Show your calculationsEssayOnline Learning Inc. lOLI) is a privately-held company based in the IUC that specializes inproviding online courses in English as a Second Language (ESL). OLI is trying to set up anew sales office in a foreign country. It needs a business license to operate in that country.The license normally lakes six months to obtain. An official of that country said that hecould expedite the process for a fee of €300.OLI estimates the new sales office can bring €300,000 incremental profit annually OLI hasjust launched a new online 40-houi course to help adult ESL learners master basicbusiness English. The price of the new course is €500 per student, the variable cost is€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent€200.000 to develop the new course before launching it. There are many online courseproviders in the marketplace, and each has its own feature However, OLI's highly qualifiedstaff and good reputation have enabled it to charge a premium price compared to its majorcompetitors. Recent market research indicates that if OLI raises the price of its newbusiness English course by 10V the student enrollment would decrease by 5V A regionalairlines company in Asia has approached OLI and offered to enroll 1.000 of its employeesin the new course if OLI would agree to a special price of €350 per employee If OLI acceptsthis offer, an additional €10,000 onetime cost would be required to temporally expand itscapacity to accommodate the new students.


Sample Question 10

Mow many student enrolments per year ate required for the new busmen English course tobreak, even at its current price? Snow your calculationsEssay Online Learning Inc. lOLI) is a privately-held company based in the IUC that specializes inproviding online courses in English as a Second Language (ESL). OLI is trying to set up anew sales office in a foreign country. It needs a business license to operate in that country.The license normally lakes six months to obtain. An official of that country said that hecould expedite the process for a fee of €300.OLI estimates the new sales office can bring €300,000 incremental profit annually OLI hasjust launched a new online 40-houi course to help adult ESL learners master basicbusiness English. The price of the new course is €500 per student, the variable cost is€300 per student, and the total fixed cost of the new course is €300.000 per year OLI spent€200.000 to develop the new course before launching it. There are many online courseproviders in the marketplace, and each has its own feature However, OLI's highly qualifiedstaff and good reputation have enabled it to charge a premium price compared to its majorcompetitors. Recent market research indicates that if OLI raises the price of its newbusiness English course by 10V the student enrollment would decrease by 5V A regionalairlines company in Asia has approached OLI and offered to enroll 1.000 of its employeesin the new course if OLI would agree to a special price of €350 per employee If OLI acceptsthis offer, an additional €10,000 onetime cost would be required to temporally expand itscapacity to accommodate the new students.


Sample Question 11

A capital budgeting analysis involves an initial investment of $500. The expected cashinflow in Year 1 is $300, and the expected cash inflow in Year 2 is $350. Which one of thefollowing equations can get the correct internal rate of return (IRR) of this project?

A. $500 = $300/(1 + IRR) + $350/(1 + IRR)
B. $500 = $300/(1 + IRR) + $350/(1 + IRR)2
C. -$500 = $300'(1 + IRR) + 5350/(1 + IRR)2
D. $0 = $300/(1 + IRR) + $350/11 + IRR)2


Sample Question 12

Using the dividend discount model, an analyst determines mat Beverly Company's equity isworth $80 per share. Beverly Company’s required rate of return is 15% and the currentrisk-free rate is 5% assuming a 0% long-term growth rate, what is Beverly's estimatedfuture annual dividend?

A. $16.00
B. $12.00
C. $8.00
D. $1.20


Sample Question 13

IF a company does not have a code of conduct, the company most likely

A. is missing important guidance on ethical decision making
B. will lack an expressed statement of values regarding ethical behavior
C. can use its statement of values instead to implement ethics in daily decision making
D. must find another way to express its ethical principles


Sample Question 14

An accounting manage' is deciding which performance measurement tool would be mostappropriate to compare firms within their company s industry given that the firms vary insize significantly. Which one of the following analysis methods would be the mostappropriate?

A. Cash flow analysis
B. Horizontal analysis
C. Sensitivity analysis
D. Vertical analysis


Sample Question 15

A company is considering investing £1 million for a new machine. The new machine isexpected to generate £450,000 incremental before-tax operating cash inflows and£100.000 in additional depreciation expense for each of the next ten years. The companyuses the same depreciation assumptions tor book and tax purposes. If the company'sincome tax rate is 30%, what is the change in the yearly after-tax cash flow from operationsif the company invests in the new machine?

A. £245,000
B. £295, 000
C. £315,000
D. £345, 000


Sample Question 16

Management is responsible for identifying potential events mat could representopportunities or threats. Which one of the following is not a viable event identificationtechnique?

A. Facilitated workshops and interviews
B. Loss event data methodologies
C. Review of control categories
D. Process flow analysis


Sample Question 17

A group of nations is considering me formation of a cartel associated with the manufactureand distribution of a product that they each export. Which one of the following outcomeswould not be consistent with me formation of a carter?

A. An increase in the output of the manufactured product
B. An increase in the selling price of the manufactured product
C. An increase m the net profits for each of the individual cartel members
D. A selling price where marginal revenue equals marginal cost


Sample Question 18

The Transformer Division of Keller Electrical Supply IS developing its Budget for next yearPreliminary estimates for the next year are as follows.• Sales of 10.000 units • Variable cost of $350 per unit• Fixed costs of $800,000. Net assets utilized on the Transformer Division are $7 million• Target rate of return on investment required by Keller is 15%If the Transformer Division utilizes cost-based pricing and uses a markup based on itstarget rate of return, what price per unit (rounded to the nearest dollar) should it use for thebudget?

A. $430
B. $495
C. $506
D. $535


Sample Question 19

Ryan Fitzgerald the vice president of finance for Southwest Development Company isevaluating a proposed expansion plan currently. Southwest Development has $660 millionof total assets and the company's equity ratio Is 38% Southwest Development has neverissued preferred shares. The company's earnings before interest and taxes (EBIT) are $836 million. The interest rate on their debt is 7 2% and the company's tax rate is 30%. Thecompany is planning to expand by investing $110 million. In assets. As result both salesand EBIT will increase by 20%. The expansion will be financed with 40% debt and 60%common equity If Southwest Development proceeds with the expansion what will happento the company's return on equally (ROE)?

A. ROE decreases from 19.78% to 18.48%.
B. ROB increases from 14.07% to 14.12%.
C. ROE decreases from 28.25% to 26.40%.
D. ROE increases from 19.78% to 20.17%.


Sample Question 20

The internal audit division of a company is investigating a potential fraud in the AccountsPayable department Someone in the department has been writing checks to fictitiousvendors and collecting the cash The primary suspect Is an employee who has own with thecompany for twelve years and recently lost his Did for promotion to Director of AccountsPayable a position which would have given mm a 25% salary increase This employee hasbeen heard complaining to several other employees in the department that he was cheatedout of his raise. Which one of the following elements of the fraud triangle is this employeeexhibiting?

A. Pressure
B. Rationalization
C. Motive
D. Opportunity


Sample Question 21

Your organization is considering implementing an Enterprise Risk Management process.You expect to obtain many benefits from this process. Which of the following is not anexpected Benefit?

A. Aligning risk appetite and strategy
B. Eliminating risk response decisions
C. Reducing operational surprises and losses
D. Seizing opportunities.


Sample Question 22

K Malone is a successful entrepreneur, Currently she is considering investing in a capitalprotect, which would benefit tourism in North Caroina Because of tourism, the State ofNorth Carolina is willing to lent) her $150,000 at a rate of 5%. well below the market rateHer estimated net cash flows for the 3-year lifetime of the project are S15 000 $89,000 and$60,000 respectively Recommend whether or not Malone should undertake this project.

A. She should undertake this project because the present value (PV) of this project is$146,843
B. She should undertake this project because the net present value (NPV) is $31,022.
C. She should not undertake this project because the net present value NPV is ($14.051).
D. She should not undertake this protect because the net present value (NPV) is ($3.157)



Exam Code: CMA-Strategic-Financial-Management
Exam Name: CMA Part 2: Strategic Financial Management Exam
Last Update: May 13, 2024
Questions: 124