MCIA-Level-1 Exam Questions and Answers

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NEW QUESTION: 1
Which of the following firm's earnings per share (EPS) figure would be least sensitive to a percentage change in Earnings Before Interest and Taxes (EBIT)?
Firm A
EBIT: $6,800,000
Interest Paid: $505,000
Total Operating Expenses: $80,000,000
Fixed Operating Expenses: $50,250,000
Firm B
EBIT: $20,000,000
Interest Paid: $600,000
Total Operating Expenses: $40,000,000
Fixed Operating Expenses: $30,250,000
Firm C
EBIT: $50,500,000
Interest Paid: $3,500,000
Total Operating Expenses: $66,000,000
Fixed Operating Expenses: $30,750,000
Firm D
EBIT: $49,700,000
Interest Paid: $7,750,000
Total Operating Expenses: $90,000,000
Fixed Operating Expenses: $75,000,000
Firm E
EBIT: $43,000,000
Interest Paid: $7,000,000
Total Operating Expenses: $85,000,000
Fixed Operating Expenses: $60,500,000
A. The answer cannot be determined from the information provided.
B. Firm B
C. Firm D
D. Firm E
E. Firm A
F. Firm C
Answer: B
Explanation:
Explanation/Reference:
Explanation:
This question is asking you to calculate the Degree of Financial Leverage for each company. The Degree of Financial Leverage (DFL) measures the percentage change in EPS that results from a given percentage change in EBIT. Financial Leverage is the second component of total leverage, along with Operating Leverage. The equation used to calculate the Degree of Financial Leverage is as follows: {DFL = [EBIT/ (EBIT - Interest Paid)]}. As companies incorporate more debt in their capital structure, their EPS figure will become more sensitive to fluctuations occurring from interest payments, and this is evidenced by an increase in the Degree of Financial Leverage. In this example, Firm B has the lowest DFL with a figure of
1.031. In light of this information, it can be concluded that firm B has an EPS figure which is the least sensitive to a given change in EBIT. When calculating the DFL figure, remember that the answer can never be less than one, and can never be negative. In a situation where the company under examination has zero debt, and no preferred stock dividends (and therefore no interest expense for purposes of the DFL equation), the DFL would be equal to one. It is important note to remember is that in calculating the Degree of Financial Leverage, dividend payments to preferred stockholders should be included in the interest expense figure. Operating expenses are not factored into the DFL calculation, rather are used in the determination of Operating Leverage.

NEW QUESTION: 2
Increasing the speed limit to 65 miles per hour or more on highways is dangerous and only leads to more accidents. Whenever the highway speed has been increased, accident rates have increased in that state.
Maine raised its turnpike speed to 65 mph in November, and more fatal accidents occurred in December than any other month in the year. Highway fatalities in December and January combined were up 18% from November.
All of the following are valid criticisms of this argument EXCEPT
A. it does not consider other possible causes for increases in accidents, such as winter weather driving conditions in Maine.
B. it does not acknowledge that speed is not the only cause of accidents.
C. it only cites statistics for one state.
D. it does not explain why the speed limit was originally set at 55 mph.
E. it does not specify whether the accident rate increase was in accidents only on the highways where the speed limit was increased or on all highways.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
The issue in the argument is whether increased speed limits are dangerous, so the argument should focus on proving that this is the case. The fact that the argument does not discuss why the speed limit was originally set at 55 mph is essentially irrelevant, so it is not a valid criticism of the argument. All of the other options, however, express valid criticisms and point out significant flaws in the reasoning.

NEW QUESTION: 3
What are characteristics of Amazon S3? (Choose two.)
A. Objects are directly accessible via a URL
B. S3 allows you to store objects or virtually unlimited size
C. S3 should be used to host a relational database
D. S3 allows you to store virtually unlimited amounts of data
E. S3 offers Provisioned IOPS
Answer: A,D
Explanation:
Explanation
The total volume of data and number of objects you can store are unlimited. Individual Amazon S3 objects can range in size from a minimum of 0 bytes to a maximum of 5 terabytes. The largest object that can be uploaded in a single PUT is 5 gigabytes. For objects larger than 100 megabytes, customers should consider using the Multipart Upload capability.
https://aws.amazon.com/s3/faqs/

NEW QUESTION: 4
The NI Performance Indicator SILT gives an understanding of...
A. ...the performance of Telecom Implementation Services.
B. ...the performed service quality.
C. ...the cash flow in the project.
D. ...the lead times of site infrastructure material.
Answer: C


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