Free CIMA CIMAPRO19-F03-1-ENG Exam Questions

Become CIMA Certified with updated CIMAPRO19-F03-1-ENG exam questions and correct answers

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Total 305 Questions | Updated On: Dec 17, 2025

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Question 1

Company A is planning to acquire Company B at a price of $ 65 million by means of a cash bid.

Company A is confident that the merged entity can achieve the same price earnings ratio as that of Company

What does Company A expect the value of the merged entity to be post acquisition?

A : $122.5 million

B : $156.0 million

C : $187.5 million

D : $207.0 million

Answer: A

Question 2

A company has accumulated a significant amount of excess cash which is not required for investment for the

foreseeable future.

It is currently on deposit, earning negligible returns.

The Board of Directors is considering returning this excess cash to shareholders using a share repurchase

programme.

The majority of shareholders are individuals with small shareholdings.

Which THREE of the following are advantages of the company undertaking a share repurchase programme?

A : dividual shareholders can realise their investment if they wish.

B : earnings per share should increase for the shareholders who do not sell their shares.

C : reduces excess cash which might have been attractive to predators.

D : reduces the amount of cash for potential future investment opportunities.

E : titutional investors generally prefer a constant predictable income in the form of dividends.

Answer: A,B,C

Question 3

An entity prepares financial statements to 31 December each year. The following data applies:

1 December 20X0

• The entity purchased some inventory for $400,000.

• In order to protect the inventory against adverse changes in fair value the entity entered into a futures

contract to sell the inventory for a fixed price on 31 January 20X1.

• The entity designated this contract as a fair value hedge of the value of the inventory.

31 December 20X0

• The inventory had a fair value of $480,000 and the futures contract had a fair value of $75,000 (a financial

liability).

What will be the impact on the statement of profit or loss and other comprehensive income for the year ended

31 December 20X0 in respect of the change in the value of the inventory and the futures contract?

A : loss of $75,000 will be recognised in profit or loss.

B : loss of $75,000 will be recognised in other comprehensive income.

C : net gain of $5,000 will be recognised in profit or loss.

D : net gain of $5,000 will be recognised in other comprehensive income.

Answer: C

Question 4

A listed company in a high growth industry, where innovation is a key driver of success has always operated a

residual dividend policy, resulting in volatility in dividends due to periodic significant investments in research

and development.

The company has recently come under pressure from some investors to change its dividend policy so that

shareholders receive a consistent growing dividend. In addition, they suggested that the company should use

more debt finance.

If the suggested change is made to the financial policies, which THREE of the following statements are true?

A : may give a signal to the market that the company is entering a period of stable growth.

B : ere may be a change to the shareholder profile due to 'the clientele effect'.

C : directors will not have to take shareholder dividend preferences into consideration in future.

D : tained earnings have a lower cost than debt finance.

E : company's financial risk will increase due to its increased use of debt finance.

Answer: A,B

Question 5

Company A needs to raise AS500 mi lion to invest in a new project and is considering using a pub ic issue of

bonds to finance the investment.

Which THREE of the following statements-relating to this bond issue are true?

A : company must be listed before it can issue bones.

B : largest issuer of bond i3 the government.

C : rchasing bonds in the capital markets enables entities to borrow large amounts of finance.

D : bond market is unregulated making it easier to raise finance

E : nds issues in the corporate debt market are underwritten.

Answer: A,B,C

Page: 1 / 61

Total 305 Questions | Updated On: Dec 17, 2025

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