Cisco
CompTIA
ISC
EC-Council
EXIN
Fortinet
ITIL
Juniper
Microsoft
VMware
Avaya
SAP
Google
NVIDIA
Salesforce
Amazon
Palo Alto Networks
ISC2
Splunk
ServiceNow
All Vendors
  2. Home
  3. Exams
  4. Financial
  5. CMA

Financial CMA Exam
Certified Management Accountant (Page 23 )

Updated On: 1-Feb-2026
Page 23 of 270
PDF with 1336 Questions
View Related Case Study

Project 1 has an expected NPV of $120,000 and a standard deviation of $200,000. Project 2 has an expected NPV of $100,000 and a standard deviation of $150,000. The correlation between these two projects is 0.80. What is the coefficient of variation for the portfolio of projects?

  1. 1.67
  2. 1.59
  3. 1.51
  4. 0.63

Answer(s): C

Explanation:

The coefficient of variation is useful when the rates of return and standard deviations of two investments differ. It measures the risk per unit of return by dividing the standard deviation by the expected return. Thus, for Project 1, dividing $200,000 by $120,000 produces a coefficient of 1.67. For Project 2, the calculation is to divide $150,000 by $100,000, or 1.50. If the two projects had perfect correlation (=1.0), then you could combine the calculations ($350,000 + $220,000 = 1.59). However, with a correlation of less than one, the risk will be something less than 1.59.



View Related Case Study

Assume that the probability distribution of Nap's is normal. The firm considers true risk occurring if the project results in a NPV that is zero or less. If the expected NPV is $1,000 and the standard deviation of NPV is $500, what is the probability that the project has an NPV of 0 or less?

  1. Less than 3%.
  2. Greater than 3%, but less than 9%.
  3. Greater than 9%, but less than 16%.
  4. Greater than 16%.

Answer(s): A

Explanation:

Since three standard deviations incorporate over 99% of all observations, and two standard deviations incorporate over 95% of observations, it means less than 5% will not be included within two standard deviations, and this is divided between both ends of the normal curve. Therefore, less than 2.5% of the observations will be in the negative portion of the curve.



View Related Case Study

Drillers Inc. is evaluating a project to produce a high-tech deep-sea oil exploration device. The investment required is $80 million for a plant with a capacity of 15.000 units a year for 5 years. The device will be sold for a price of $12,000 per unit. Sales are expected to be 12,000 units per year. The variable cost is $7,000 and fixed costs, excluding depreciation, are $25 million per year. Assume Drillers employs straight-line depreciation on all depreciable assets, and assume that they are taxed at a rate of 36%. If the required rate of return is 12%, what is the approximate NPV of the project?

  1. $17,225,000
  2. $21511,000
  3. $26.780000
  4. $56117000

Answer(s): B

Explanation:



View Related Case Study

The following forecasts have been prepared for a new investment by Oxford Industries of $20 million with an 8-year life:

Assume that Oxford employs straight-line depreciation, and that they are taxed at 35%. Assuming an opportunity cost of capital of 14%, what is the NPV of this project, based on expected outcomes?

  1. $2,626,415
  2. $4,563,505
  3. $6,722,109
  4. $8,055,722

Answer(s): B

Explanation:

The first step is to calculate the annual cash flows from the project for the base case (the expected values). These may be calculated as shown:


This level of cash flow occurs for each of the 8 years of the project. The present value of an 8-year, $1 annuity is 4.639 at 14%. The NPV of the project is therefore given by:



View Related Case Study

Pena Company is considering a project that calls for an initial cash outlay of $50,000. The expected net cash inflows from the project are $7,791 for each of 10 years. What is the PR of the project?

  1. 6%
  2. 7%
  3. 8%
  4. 9%

Answer(s): D

Explanation:



Viewing page 23 of 270
Viewing questions 111 - 115 out of 1336 questions



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

Join the CMA Discussion