Free CIMA CIMAPRA19-F03-1-ENG Exam Questions

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

Page: 1 / 61

Total 305 Questions | Updated On: Jun 03, 2025

Add To Cart

Question 1

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 2

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 3

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 4

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 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.