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CIMA F3 Financial Strategy Sample Questions (Q283-Q288):
NEW QUESTION # 283
The value of a call option will increase because of:
- A. A decrease in the volatility of the share.
- B. An increase in the strike price.
- C. An increase in the time to expiry.
- D. A decrease in the market value of the share
Answer: D
NEW QUESTION # 284
Company A is planning to acquire Company B.
Company A's managers think they can improve the performance of Company B to the extent that its own P/E ratio should be applied to Company B's earnings.
Relevant Data:
What is the expected synergy if the acquisition goes ahead?
Give your answer to the nearest $ million.
Answer:
Explanation:
$ ? million
8, 8000000
NEW QUESTION # 285
Company E is a listed company. Its directors are valuing a smaller listed company, Company F, as a possible acquisition.
The two companies operate in the same markets and have the same business risk.
Relevant data on the two companies is as follows:
Both companies are wholly equity financed and both pay corporate tax at 30%.
The directors of Company E believe they can "bootstrap" Company F's earnings to improve performance.
Calculate the maximum price that Company E should offer to Company F's shareholders to acquire the company.
Give your answer to the nearest $million.
- A. 3,150
- B. 2,700
- C. 4,500
- D. 1,890
Answer: A
NEW QUESTION # 286
Select the category of risk for each of the descriptions below:
Answer:
Explanation:
NEW QUESTION # 287
Company C has received an unwelcome takeover bid from Company P.
Company P is approximately twice the size of Company C based on market capitalisation.
Although the two companies have some common business interests, the main aim of the bid is diversification for Company P.
The offer from Company P is a share exchange of 2 shares in Company P for 3 shares in Company C.
There is a cash alternative of $5.50 for each Company C share.
Company C 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. All prices are in $.
Which of the following would be the most appropriate action by Company C's directors following receipt of this hostile bid?
- A. Change the Articles of Association to increase the percentage of shareholder votes required to approve a takeover.
- B. Write to shareholders explaining fully why the company's share price is under valued.
- C. Pay a one-off special dividend.
- D. Refer the bid to the country's competition authorities.
Answer: B
NEW QUESTION # 288
......
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