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: Oct 29, 2025

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Question 1

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 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 U has made a bid for the entire share capital of Company B.

Company U is offering the shareholders in Company B the option of either a share exchange or a cash

alternative.

Advise the shareholders in Company B which THREE of the following would be considered disadvantages of

accepting the cash consideration?

A : h consideration is certain whereas Company U's future share price performance is uncertain.

B : terest rates on deposit accounts are currently at a historic low and are expected to remain low.

C : mpany U is not expected to change its dividend policy post-acquisition.

D : xation is payable on realised capital gains.

E : ere will be no opportunity to participate in the future economic success of Company U.

Answer: A,B,D

Question 4

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 : ntrol premium not being included within the proxy p/e ratio used.

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

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: Oct 29, 2025

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