Question 1

Which THREE of the following are considered in detail in IFRS 7 Financial Instruments: Disclosures?

Options :

A : Credit risk

B : Business risk

C : Market risk

D : Enterprise risk

E : Liquidity risk

Answer: A,C

Question 2

A company has just received a hostile bid. Which of the following response strategies could be considered?

Options :

A : Revalue non-current assets

B : Poison pill strategy

C : Change the Articles of Association to amend voting rights

D : Approach a White Knight

Answer: D

Question 3

An unlisted company operates in a niche market, exploring the west coast of Africa for new oiI reservoirs.

The oil exploration program has been successful in recent years and t now has a substantial amount of oil

reserves with a high level of certainty of being recoverable Under financial reporting regulations, oil still in the

ground is not recognised as an asset unit is extracted.

The expense of the exploration program has used up all the company’s available cash resources.

The company has denied to list or a stock market and raise finds through an initial public offering to finance

its drilling program.

Which of the following valuation methods in the appropriate to use in calculating an initial listing price for this

company?

Options :

A : Market capitalisation.

B : Framings valuation using the ratio of a multinational oil exploration company

C : Net asset valuation based on book values.

D : Discounted cash flow valuation

Answer: D

Question 4

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?

Options :

A : Cash consideration is certain whereas Company U-s future share price performance is uncertain.

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

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

D : Taxation is payable on realised capital gains.

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

Answer: A,B,D

Question 5

Which THREE of the following would be most important if a hospital wishes to review the effectiveness of its services?

Options :

A : The proportion of surgical procedures that are deemed to be successful.

B : Average waiting times for treatment.

C : Patient satisfaction ratings.

D : Staff costs compared to previous years.

E : Revenue generated from car park charges.

Answer: A,B,C

Higher Test Marks with Free Online CIMAPRA19-F03-1-ENG Exam Practice

Buying Options: