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CMA Part 2 Practice Exam 4

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Question 1 of 10

1. Question

A company purchases an insurance policy to protect its warehouse against fire damage. Under the COSO ERM framework, this risk response is categorized as:

Avoidance
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Reduction
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Sharing
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Acceptance
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Question 2 of 10

2. Question

Which component of the COSO ERM framework focuses on an organization’s culture, ethical values, and board structure?

Governance and Culture
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Performance
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Review and Revision
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Strategy and Objective-Setting
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Question 3 of 10

3. Question

Risk assessment should evaluate identified risks based on which two primary dimensions?

Cost and Benefit
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Impact and Probability
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Speed and Duration
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Internal and External
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Question 4 of 10

4. Question

The risk that exists for an organization before management takes any steps to alter the risk’s likelihood or impact is called:

Residual risk
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Secondary risk
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Inherent risk
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Operating risk
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Question 5 of 10

5. Question

An investment requires an initial outlay of $100,000 and is expected to produce annual cash inflows of $30,000 for 5 years. The cost of capital is 10%. Using the PV Annuity factor of 3.791, what is the Net Present Value (NPV)?

$13,730
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($13,730)
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$50,000
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$113,730
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Question 6 of 10

6. Question

Which of the following is true regarding the Internal Rate of Return (IRR)?

It is the discount rate that makes the NPV equal to zero.
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Cash flows are assumed to be reinvested at the cost of capital.
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A project is accepted if the IRR is less than the hurdle rate.
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It is easier to calculate than NPV when cash flows are uneven.
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Question 7 of 10

7. Question

A project costs $200,000 and generates $80,000 per year in cash inflows. What is the simple payback period?

2.0 years
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3.0 years
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2.5 years
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4.0 years
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Question 8 of 10

8. Question

When choosing between two mutually exclusive projects, NPV and IRR may provide conflicting rankings. This is most likely due to:

The size of the initial investment.
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Differences in the timing of cash flows.
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The difference in reinvestment rate assumptions.
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All of the answer choices are correct.
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Question 9 of 10

9. Question

A CMA discovers that their company is overstating earnings by delaying the recording of valid accounts payable. Under the IMA Statement of Ethical Professional Practice, which principle is most directly violated if the CMA fails to report this?

Competence
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Confidentiality
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Integrity
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Strategic Planning
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Question 10 of 10

10. Question

A management accountant is asked by a superior to skip a mandatory reconciliation to meet a month-end deadline. According to the IMA’s Credibility standard, the accountant should:

Comply with the request to demonstrate loyalty.
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Disclose all relevant information that could reasonably influence an intended user's understanding.
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Keep the omission confidential to protect the firm's reputation.
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Only report the issue if it results in a material error.
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Next: CMA Part 2 Practice Exam 5

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CMA Part 1

Practice Exam 1
Practice Exam 2
Practice Exam 3
Practice Exam 4
Practice Exam 5
Practice Exam 6
Practice Exam 7
Practice Exam 8
Practice Exam 9
Practice Exam 10

CMA Part 2

Practice Exam 1
Practice Exam 2
Practice Exam 3
Practice Exam 4
Practice Exam 5
Practice Exam 6
Practice Exam 7
Practice Exam 8
Practice Exam 9
Practice Exam 10

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