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: Jun 15, 2026

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Question 1

TU has relatively few tangible assets and is dependent for profits and growth on the high-value individuals it employs. Which of the following statements best explains why the net asset valuator method’s considered unstable for TU?

A : does not account for its tangible assets

B : does not account for its intangible assets.

C : accounts for its intangible assets at net realisable value.

D : accounts for its intangible assets at historical value.

Answer: B

Question 2

An analyst has valued a company using the free cash flow valuation model.

The analyst used the following data in determining the value:

• Estimated free cashflow in 1 year's time = $100,000

• Estimated growth in free cashflow after the first year = 5?ch year indefinitely

• Appropriate cost of equity = 10%

The result produced by the analyst was as follows:

Value of equity = $100,000 (1+0.05)/0.10 = $1,050,000

The analyst made a number of errors in determining the value.

By how much has the analyst undervalued the company?

A : $950,000

B : $2,000,000

C : $2,100,000

D : $1,050,000

Answer: A

Question 3

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 4

A company has just received a hostile bid. Which of the following response strategies could be considered?

A : value non-current assets

B : ison pill strategy

C : ange the Articles of Association to amend voting rights

D : proach a White Knight

Answer: D

Question 5

When valuing an unlisted company, a P/E ratio for a similar listed company may be used but adjustments to

the P/E ratio may be necessary.

Which THREE of the following factors would justify a reduction in the proxy p/e ratio before use?

A : relative lack of marketability of unlisted company shares.

B : lower level of scrutiny and regulation for unlisted companies.

C : listed companies being generally smaller and less established.

D : listed companies being generally smaller and less established.

E : forecast earnings growth being relatively higher in the unlisted company.

F : profit item within the unlisted company's latest earnings which will not reoccur.

Answer: A,B,C

Page: 1 / 61

Total 305 Questions | Updated On: Jun 15, 2026

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