El Bari Quiz

CSO: 1B1d LOS: 1B1i

After leading the market for the past decade, the growth of product ABC is slowing down. In this stage of its life cycle, the product is still generating significant amounts of cash flows that cover the company’s investment into new product innovations. According to the BCG Growth-Share Matrix, product ABC is most likely an example of a

• star

• cash cow.

• question mark.

• dog.

A company produces and sells 2,000 units of finished goods and incurs $60,000 of fixed costs annually. The contribution margin is $60 per unit, and variable cost is $40 per unit. If the company expects sales quantities to increase by 10% next year, the operating profit will be

• $132,000.

• $72,000.

• $120,000.

• $60,000.

A company is analyzing the opportunity to expand into a new market. The expansion would require an initial investment of $261,600. Cash flows for the new market expansion are forecasted to be $120,000 for each of the next 3 years. The company has a cost of capital of 8%. The discounted payback period for the new market expansion would be

• 2.0 years.

• 2.2 years.

• 2.5 years.

• 2.8 years.

A Bangladeshi wholesale export company publishes a price list in Euros for the products sold by its European Union business unit. The management of the export company has determined that even if there are fluctuations in exchange rates between the Bangladeshi Taka and European Euro, it is not practical for it to change its product prices every six months. Which one of the following is the most appropriate solution available to the export company to managing this risk?

• Hedging the risk through financial instruments.

• Diversifying its product offerings.

• Disposing of the business unit.

• Establishing operational sales limits.

Which one of the following is an example of an overarching ethical principle from IMA's Statement of Ethical Professional Practice?

• Competence.

• Confidentiality.

• Fairness.

• Integrity.

In preparing a multi-year revenue forecast, a financial analyst uses a technique that generates a distribution of possible results based on repeated sampling. The analyst is most likely using which one of the following?

• Sensitivity analysis.

• Monte Carlo simulation.

• Scenario analysis.

• Activity analysis.

Based on COSO’s integrated framework, all of the following are components of Enterprise Risk Management except

• risk response.

• control activities.

• objective setting.

• feasibility analysis.