最新のCIMAPRA19-F03-1問題集で試験を準備する

A Venture Capital Fund currently holds a significant shareholding in a large private company as a result of funding a recent management buyout. It plans to exit this investment in 5 years time at a significant profit.
Which THREE of the following exit mechanisms are most likely to be preferred by the Venture Capital Fund?

• A. The Venture Capital Fund has a legal entitlement to sell its shareholding to any third party investor if the company has not obtained a stock market listing within 5 years.
• B. The management team agrees to buy back the Venture Capital Funds shareholding in 5 years time at its original cost.
• C. The management team has an option to buy the Venture Capital Fund's shares for their nominal value which can be exercised in 5 years time.
• D. The private company obtains a stock market listing on a recognised exchange within the next 5 years.
• E. The Venture Capital Fund has an option to sell its shareholding to the company at twice its original cost which can be exercised in 5 years time.

A company gas a large cash balance but its directors have been unable to identify any positive NPV projects to invest in. Which THREE of the following are advantages of a share repurchase, compared with a one-off large dividend?

• A. It increases the number of shares issue.
• B. The shareholder can choose whether to take the cast or not.
• C. It will not create an expectation for future increased dividends.
• D. It means that the company will be able to pay lower total dividends in the future.
• E. It returns cash to shareholders so that they can choose hew to spend It

A company has a covenant on its 5% long term corporate bond.
* Covenant - The earnings must not fall below $7 million
The bond has a nominal value of $60 million.
It is currently trading at 80% of its nominal value.
The projected earnings before interest and taxation for next year are $11.5 million.
The company retains 80% of its earnings. It pays tax at 20%.
Advise the Board of Directors which of the following covenant conditions will apply next year?

• A. The earnings will be = $6.80 million (The covenant will be breached).
• B. The earnings will be = $11.50 million (The covenant will not be breached).
• C. The earnings will be = $5.44 million (The covenant will be breached).
• D. The earnings will be = $7.28 million (The covenant will not be breached).

A company has:
* $7 million market value of equity
* $5 million market value of debt
* WACC of 9.375%
* Corporate income tax rate of 15%
According to Modigliani and Miller's theory of capital structure with tax, what is the ungeared cost of equity?

• A. 10.00%
• B. 8.79%
• C. 10.27%
• D. 14.52%

A listed company is planning a share repurchase.
The following data applies:
* There are 10 million shares in issue
* The share repurchase will involve buying back 20% of the shares at a price of $0.75
* The company is holding $2 million cash
* Earnings for the current year ended are $2 million
The Directors are concerned about the impact that this repurchase programme will have on the company's cash balance and current year earnings per share (EPS) ratio.
Advise the directors which of the following statements is correct?

• A. The cash balance will decrease by 20% and the EPS will decrease by 25%.
• B. The cash balance will decrease by 75% and EPS will increase by 25%.
• C. The cash balance will decrease by 75% and EPS will decrease by 25%.
• D. The cash balance will decrease by 20% and the EPS will increase by 25%.