Free CIMA CIMAPRA19-F03-1-ENG Exam Questions

Become CIMA Certified with updated CIMAPRA19-F03-1-ENG exam questions and correct answers

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Total 305 Questions | Updated On: Nov 12, 2024

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Question 1

Company W has received an unwelcome takeover bid from Company B. The offer is a share exchange of 3

shares in Company B for 5 shares in Company W or a cash alternative of $5.70 for each Company W share.

Company B is approximately twice the size of Company W based on market capitalisation. Although the two

companies have some common business interested the main aim of the bid is diversification for Company B.

Company W has substantial cash balances which the directors were planning to use to fund an acquisition.

These plans have not been announced to the market.

The following share price information is relevant.

Which of the following would be the most appropriate action by Company W's directors following receipt of

this hostile bid?

A : Change the Articles of Association to increase the percentage of shareholder votes required to approve atakeover.

B : fer the bid to the country's competition authorities.

C : ite to shareholders explaining fully why the company's share price is under valued.

D : y a one-off special dividend.

Answer: C

Question 2

H Company has a fixed rate load at 10.0%, but wishes to swap to variable. It can borrow at LIBOR 8%.

The bank is currently quoting swap rates of 3.1% (bid) and 3.5% (ask).

What net rate will H Company pay if it enters into the swap?

A : BOR +6.5%

B : BOR +8%

C : BOR +6.9%

D : BOR +3.1%

Answer: C

Question 3

Company Z has just completed the all-cash acquisition of Company A.

Both companies operate in the advertising industry.

The market considered the acquisition a positive strategic move by Company Z.

Which THREE of the following will the shareholders of Company Z expect the company's directors to

prioritise following the acquisition?

A : realisation of anticipated post-acquisition synergies.

B : development of a dividend policy to meet the expectations of the target company shareholders.

C : integration and retention of key employees.

D : regulatory approval required to complete the acquisition.

E : retention of key customers of the acquired company.

Answer: A,C

Question 4

An unlisted company operates in a niche market, exploring the west coast of Africa for new oiI reservoirs.

The oil exploration program has been successful in recent years and t now has a substantial amount of oil

reserves with a high level of certainty of being recoverable Under financial reporting regulations, oil still in the

ground is not recognised as an asset unit is extracted.

The expense of the exploration program has used up all the company’s available cash resources.

The company has denied to list or a stock market and raise finds through an initial public offering to finance

its drilling program.

Which of the following valuation methods in the appropriate to use in calculating an initial listing price for this

company?

A : rket capitalisation.

B : amings valuation using the ratio of a multinational oil exploration company

C : t asset valuation based on book values.

D : counted cash flow valuation

Answer: D

Question 5

A company needs to raise $20 million to finance a project.

It has decided on a rights issue at a discount of 20% to its current market share price.

There are currently 20 million shares in issue with a nominal value of $1 and a market price of $5 per share.