IMANET CMA Exam - Topic 1 Question 14 Discussion

Actual exam question for IMANET's CMA exam

Question #: 14
Topic #: 1

The maximum benefit forgone by using a scarce resource for a given purpose and not for the next-best alternative is called?

AOpportunity cost.

BSunk cost.

CIncremental cash flow.

DNet initial investment.

Show Suggested Answer

Suggested Answer: A

An opportunity cost is the maximum benefit forgone by using a scarce resource for a given purpose and not for the next-best alternative. In capital budgeting, the most basic application of this concept is the desire to place the company's limited funds in the most promising capital project(s).

by Mozell at May 09, 2022, 03:54 PM

Limited Time Offer

25%

Off

Get Premium CMA Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Vince

6 months ago

I thought it was something else, but A makes sense.

upvoted 0 times

...

Catina

7 months ago

Yup, A is spot on!

upvoted 0 times

...

Kiera

7 months ago

Wait, are we sure it's not sunk cost?

upvoted 0 times

...

Yoko

7 months ago

Totally agree, that's the right term.

upvoted 0 times

...

Tora

7 months ago

It's definitely A, opportunity cost!

upvoted 0 times

...

Lenny

7 months ago

I’m a bit confused. Isn’t incremental cash flow about future cash? I don’t think that fits this definition.

upvoted 0 times

...

Lynette

7 months ago

I feel like I've seen a similar question before, and opportunity cost was definitely the term we used. It makes sense here too.

upvoted 0 times

...

Irma

7 months ago

I'm not entirely sure, but I remember something about sunk costs being related to past expenses. That doesn't seem right for this question though.

upvoted 0 times

...

Bette

7 months ago

I think the answer is A, opportunity cost. We talked about it in class as the value of the next best alternative.

upvoted 0 times

...

Katie

7 months ago

Hmm, I'm not totally sure about this one. I know there are different types of encryption, but I can't quite remember the differences between symmetric and asymmetric. I'll have to think this through carefully.

upvoted 0 times

...

Xochitl

7 months ago

I'm a little confused by the differences between the VPN and Dedicated Interconnect options. I'll need to review the details of each before making a decision. Maybe I'll start by looking into the performance characteristics of each to see which one best fits the requirements.

upvoted 0 times

...

Gilma

8 months ago

Okay, I've got this. Robert should provide management with the project's work performance measurements, which track the deliverables status, costs, and schedule progress. That's the component that directly addresses the question.

upvoted 0 times

...