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: Apr 28, 2026

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Question 1

Extracts from a company's profit forecast for the next financial year as follows:

Since preparing the forecast, the company has decided to return surplus cash to shareholders by a share

repurchase arrangement.

The share repurchase would result in the company purchasing 20% of the 1,250 million ordinary shares

currently in issue and canceling them.

Assuming the share repurchase went ahead, the impact on the company's forecast earnings per share will be an

increase of:

A : $0.100

B : $0.125

C : $0.175

D : $0.200

Answer: A

Question 2

The Board of Directors of Company T is considering a rights issue to fund a new investment opportunity

which has a zero NPV.

The Board of Directors wishes to explain to shareholders what the theoretical impact on their wealth will be as

a result of different possible actions during the rights issue.

Which THREE of the following statements in respect of theoretical shareholder wealth are true?

A : shareholders exercise their full rights there will be no impact on their wealth.

B : the shareholders allow their rights to lapse (do nothing) there will be no impact on their wealth.

C : shareholders sell their entire rights entitlement there will be no impact on their wealth.

D : the shareholders only partially exercise their rights and allow the remainder to lapse there will be no impact on their wealth

E : shareholders partially exercise their rights and sell the remaining rights entitlement there will be no impact on their wealth.

Answer: A,C

Question 3

A company's current profit before interest and taxation is $1.1 million and it is expected to remain constant for

the foreseeable future.

The company has 4 million shares in issue on which the earnings yield is currently 10%. It also has a $2

million bond in issue with a fixed interest rate of 5%.

The corporate income tax rate is 20% and is expected to remain unchanged.

Which of the following is the best estimate of the current share price?

A : $2.75

B : $2.50

C : $2.00

D : $1.10

Answer: C

Question 4

Two listed companies in the same industry are joining together through a merger.

What are the likely outcomes that will occur after the merger has happened?

Select ALL that apply

A : crease in customer base.

B : mpetition authorities step in to stop a potential price monopoly.

C : crease in employee motivation due to internal changes.

D : anges to supplier relationships owing to internal changes.

E : t savings from synergistic benefits and economies of scale.

Answer: A,C,D

Question 5

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

Page: 1 / 61

Total 305 Questions | Updated On: Apr 28, 2026

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