Question 1

Kim is thinking of organizing a fund raiser charity. She has planned to rent a banquet hall and provide

to support a local the guests with food, entertainment, and various party favors. She has decided to

charge $500 a person. After researching around town, Kim has discovered the following costs:

If Kim’s goal is to raise $10,000 for her charily, how many people must attend the banquet?

Options :

A : 404

B : 425

C : 428

D : 446

Answer: D

Question 2

AA Company has purchased one share of QQ Company common stock and one put option. It has also

sold one call option. The options are written on one share of QQ Company common stock and have

the same maturity date and exercise price. The exercise price ($40) is the same as the share price.

Moreover, the options are exercisable only at the expiration date. Assuming the present value of the

exercise price is $36 and the value of the call is $4.50. the value of the put in accordance with the

put-call panty theorem is

Options :

A : $450

B : $400

C : $50

D : $0

Answer: C

Question 3

Assume that each day company writes and receives checks totaling $10,000. If it takes 5 days for the

checks to clear and be deducted from the company’s account, and only 4 days for the deposits to

clear, what is the float?

Options :

A : $10,000

B : R$0

C : $(10,000)

D : $50,000

Answer: A

Question 4

A company has two divisions, A and B, each operated as a profit center. A charges B $35 per unit for

each unit transferred to B. Other data follow:

A is planning to raise its transfer price to $50 per unit Division B can purchase units at $40 each from

outsiders, but doing so would idle A’s facilities now committed to producing units for B. Division A

cannot increase its sales to outsiders. From the perspective of the company as a whole, from whom

should Division B acquire the units, assuming B’s market is unaffected?

Options :

A : Outside vendors

B : Division A, but only at the variable cost per unit

C : Division A, but only until fixed costs are covered, then from outside vendors,

D : Division A, despite the increased transfer price.

Answer: D

Question 5

Which attribute of the product mix corresponds to the number of product lines?

Options :

A : Depth

B : Consistency

C : Width

D : Length

Answer: C

Confidently Practice Online with Free CMA Exam Cram

Buying Options: