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: Dec 22, 2020

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Question 1

A is a listed company. Its shares trade on a stock market exhibiting semi-strong form efficiency.

Which of the following is most likely to increase the wealth of A's shareholders?

A : nouncing that a project will be undertaken generating a positive net present value.

B : nouncing that the final dividend will remain unchanged from the previous 3 years.

C : nouncing that a non-current asset will be revalued in the statement of financial position.

D : nouncing that inventory will be impaired.

Answer: A

Question 2

Company P is a large unlisted food-processing company.

Its current profit before interest and taxation is $4 million, which it expects to be maintainable in the future.

It has a $10 million long-term loan on which it pays interest of 10%.

Corporate tax is paid at the rate of 20%.

The following information on P/E multiples is available:

Which of the following is the best indication of the equity value of Company P?

A : $80 million

B : $40 million

C : $48 million

D : $24 million

Answer: D

Question 3

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 4

A listed company in a high technology industry has decided to value its intellectual capital using the

Calculated Intangible Value method (CIV).

Relevant data for the company:

• Pays corporate income tax at 30%

• Cost of equity is 9%, pre-tax cost of debt is 7% and the WACC is 8%

• The value spread has been calculated as $26 million

Calculate the CIV for the company.

A : 228 million

B : 289 million

C : 531 million

D : 325 million

Answer: A

Question 5

Company A is located in Country A, where the currency is the A$.

It is listed on the local stock market which was set up 10 years ago.

It plans a takeover of Company B, which is located in Country B where the currency is the B$, and where the

stock market has been operating for over 100 years.

Company A is considering how to finance the acquisition, and how the shareholders of Company B might

respond to a share exchange or cash (paid in B$).

Which of the following is likely to explain why the shareholders of Company B would prefer a share exchange

as opposed to a cash offer?

A : would allow them to realise their investment and make a capital gain.

B : would avoid them being exposed to foreign currency risk.

C : ey would receive shares in a market that is likely to be more efficient.

D : would enable them to benefit from the future performance of the combined entity.

Answer: D

Page: 1 / 61

Total 305 Questions | Updated On: Dec 22, 2020

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