CompTIA
Checkpoint
ISC
HP
Dell
EC-Council
EXIN
Fortinet
ITIL®
Juniper
PMI
Microsoft
VMware
Avaya
Google
Salesforce
Amazon
Palo Alto Networks
Certiport
ISC2
All Vendors
  2. Home
  3. Exams
  4. Financial
  5. CMA

Free CMA Exam Braindumps (page: 138)

Page 138 of 336
PDF with 1336 Questions
View Related Case Study

In general, it is more expensive for a company to finance with equity capital than with debt capital because

  1. Long-term bonds have a maturity date and must therefore be repaid in the future.
  2. Investors are exposed to greater risk with equity capital.
  3. The interest on debt is a legal obligation
  4. Equity capital is in greater demand than debt capital

Answer(s): B

Explanation:

Providers of equity capital are exposed to more risk than are lenders because the firm is not obligated to pay them a return. Also, in case of liquidation, creditors are paid before equity investors. Thus, equity financing is more expensive than debt because equity investors require a higher return to compensate for the greater risk assumed.



View Related Case Study

The equity section of Smith Corporation's Statement of Financial Position is presented below.

Preferred stock, $100 par $12,000,000
Common stock, $5 par 10,000,000
Paid-in capital in excess of par 18,000,000
Retained earnings 9,000000
Net worth $49,000,000

The common shareholders of Smith Corporation have preemptive rights. If Smith Corporation issues 400,000 additional shares of common stock at $6 per share, a current holder of 20,000 shares of Smith Corporation's common stock must be given the option to buy

  1. 1,000 additional shares
  2. 3,774 additional shares.
  3. 4,000 additional shares.
  4. 3,333 additional shares.

Answer(s): C

Explanation:

Common shareholders usually have preemptive rights, which means they have first right to purchase any new issues of stock in proportion to their current ownership percentages. The purpose of a preemptive right is to allow stockholders to maintain their current percentages of ownership. Given that Smith had 2,000,000 shares outstanding ($10,000,000÷ $5 par), an investor with 20.000 shares has a 1% ownership. Hence, this investor must be allowed to purchase 4,000 (400,000 shares x 1%) of the additional shares.



View Related Case Study

The formula for determining the value of one stock right when the price of the stock is rights-on is


If: Ron = market value of one right when the stock is selling rights-on.
Pon = market value of one share of stock with
rights-on.
N = number of nights necessary to purchase
one share of stock.
S = subscription price per share.
If the market price of a stock is $50 per share, the subscription price is $40 per share, and three rights are necessary to buy an additional share of stock, the theoretical market value of one right used to buy the stock prior to the ex-rights date is

  1. $2.00
  2. $2.50
  3. $10.00
  4. $40.00

Answer(s): B



View Related Case Study

A company's stock trades rights-on for $50.00 and ex-rights for $48.00. The subscription price for rights holders is $40.00, and four rights are required to purchase one share of stock.The value of a right while the stock is still trading rights-on is

  1. $0.40
  2. $0.50
  3. $1.60
  4. $2.00

Answer(s): D

Explanation:

Until rights are actually issued, the stock trades rights-on, meaning that the stock and rights are inseparable. If P is the value of a share rights-on, S is the subscription price of a new share, and N is the number of rights needed to buy a new share, the value of a right when the stock is selling rights-on is (P - S) ÷ (N + 1). Thus, the value of a right when the stock is selling rights-on is $2.00 [($50-$40) ÷ (4 + 1)].



Page 138 of 336



Post your Comments and Discuss Financial CMA exam with other Community members:

nancy commented on March 16, 2024
Good to learn from here
INDIA
upvote

Tacy commented on October 18, 2023
Awesome content
Anonymous
upvote

Georgodino commented on April 29, 2021
The study package is helpful in passing your exam since the practice questions are copied from real exam. But in order to learn the modules in details you need books.
ARGENTINA
upvote

Joe commented on May 16, 2019
Just Bought it, will share result with you.
Anonymous
upvote

emad hamdy commented on May 03, 2019
great for passing not so good for learning. Just use it as cheat sheet.
UNITED STATES
upvote

Amer Alnajjar commented on March 11, 2019
Still the test is under process
Anonymous
upvote

Exam Passer commented on December 06, 2018
I wrote the exam yesterday and it was a great success. Good job guys.
UNITED ARAB EMIRATES
upvote

Muhannad commented on October 09, 2018
Easy way to download
Anonymous
upvote

Harshavardhan Yedla commented on October 02, 2017
good
UNITED STATES
upvote

James commented on February 23, 2017
Ok just downloaded this exam....looks pretty damn good to me..I think this will help me pass easily.
UNITED STATES
upvote

RYAN commented on December 24, 2016
I JUST BOUGHT THIS AND I WILL BE SURE IT IS HELPFUL!! I'LL LET YOU KNOW AFTER TAKING EXAM.
UNITED STATES
upvote

KT commented on December 17, 2016
I just bought the test bank. I will provide a feedback once I start going through it and studying.
UNITED STATES
upvote

Sachin commented on May 16, 2016
Seems to be a great Stuff. Needs to prepare for the exam and hope it will be very useful.
UNITED ARAB EMIRATES
upvote

Sairam Beeman commented on January 05, 2016
very bad. pdf e-book not downloading. Latest updated questions not available. Waste of money. Don't buy this product.
UNITED STATES
upvote

Mik commented on October 08, 2015
I have difficulties downloading the CMA material! I hope that the product is right. Could anyone help me in downloading this please?
JORDAN
upvote