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CMA (IMA) Finance — practice by topic

Browse 28 questions across 3 Finance topics. Choose what you want to revise, then open a question to check its answer and worked solution.

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Finance topics

Corporate Finance (28)Cost of Capital (28)Finance (28)

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A company can pay for its assets in two ways. One is equity financing and the other is:Read the answer and worked solution →The average of a firm's debt and equity costs, weighted by their share of firm value, is the:Read the answer and worked solution →The weights used in that average are the proportions of debt and equity in the firm's:Read the answer and worked solution →A firm's cost of debt is described as the interest rate it would have to pay to do what with its existing debt?Read the answer and worked solution →

Worked practice questions

A company can pay for its assets in two ways. One is equity financing and the other is:

  1. Debt financing
  2. Barter financing
  3. Rent financing
  4. Grant financing
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Correct answer: A. Debt financing

1. Two sources appear on the balance sheet. 2. One of them is borrowed money. 3. It is debt financing. _Source: OpenStax Principles of Finance 2e, Chapter 17, How Firms Raise Capital._

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The average of a firm's debt and equity costs, weighted by their share of firm value, is the:

  1. Current ratio
  2. Weighted cost
  3. Gross margin
  4. Equity return
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Correct answer: B. Weighted cost

1. Both sources are averaged. 2. The weights come from firm value. 3. It is the weighted cost of capital. _Source: OpenStax Principles of Finance 2e, Chapter 17, How Firms Raise Capital._

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The weights used in that average are the proportions of debt and equity in the firm's:

  1. Capital structure
  2. Delivery routing
  3. Sales mix plan
  4. Staff roster plan
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Correct answer: A. Capital structure

1. The mix of funding is meant. 2. Debt and equity make it up. 3. It is the capital structure. _Source: OpenStax Principles of Finance 2e, Chapter 17, How Firms Raise Capital._

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