Free IMA CMA Part 2 (Strategic Financial Management) Corporate Finance Practice Questions

Corporate Finance on CMA Part 2 covers risk and return concepts (CAPM, beta, expected return), the cost of capital (WACC, cost of debt, cost of equity), capital structure decisions, working capital management, raising capital, dividend policy, and international finance including foreign exchange exposure and hedging.

113 questions 44 easy 45 medium 24 hard 2026 syllabus

Sample Questions

Question 1 Easy
Stock A has an expected return of 12% and a standard deviation of 8%. What is the coefficient of variation for Stock A?
Solution
C is correct. The coefficient of variation (CV) measures risk per unit of expected return and is computed as CV=σ/E(R)CV = \sigma / E(R). Substituting the given values: CV=8%/12%=0.667CV = 8\% / 12\% = 0.667. A lower CV indicates less risk per unit of return.
Question 2 Medium
A 10-year bond with a face value of $1,000 pays an annual coupon of 6% and currently trades at $900. Using the approximation formula, what is the bond's yield to maturity?
Solution
D is correct. The approximate YTM is YTM≈[C+(F−P)/n]/[(F+P)/2]\text{YTM} \approx [C + (F - P)/n]/[(F + P)/2], where C is the annual coupon, F is face value, P is price, and n is years to maturity. Annual coupon = $1,000 × 6% = $60. Discount amortization = ($1,000 − $900)/10 = $10. Average price = ($1,000 + $900)/2 = $950. YTM ≈ (60 + 10)/950 ≈ 7.37%, which rounds to 7.4%.
Question 3 Hard
The spot exchange rate is $1.1000 per euro. The one-year U.S. interest rate is 5% and the one-year euro interest rate is 3%. A U.S. firm will receive €10,000,000 in one year and hedges using a one-year forward contract priced at covered interest rate parity. What is the approximate USD value the firm locks in?
Solution
B is correct. Covered interest rate parity gives F=S×1+iUSD1+iEURF = S \times \frac{1 + i_{USD}}{1 + i_{EUR}}. So F=1.1000×(1.05/1.03)=1.1000×1.019417=1.121359F = 1.1000 \times (1.05 / 1.03) = 1.1000 \times 1.019417 = 1.121359 USD per euro. Locked-in USD = €10,000,000 x 1.121359 = $11,213,592.
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