Latest CIMA CIMAPRA19-F03-1 Exam dumps 2026

Question No: 1

MultipleChoice

A company's current earnings before interest and taxation are $5 million.

These are expected to remain constant for the forseeable future.

The company has 10 million shares in issue which currently tradeat $3.60.

It also has a $10 million long term floating rate loan.

The current interest rate on this loan is 5%.

The company pays tax at 20%.

The company expects interest rates to increasenext yearto 6% andit's Price/Earnings (P/E) ratioto move to 9.5 times by the end of next year.

What percentagereduction in the share pricewill occurby the end of next year iftheinterest rate increaseand theP/Emovementboth occur?

Options

AReduction of 7%

BReduction of 5%

CReduction of 1%

DReduction of 0%

Question No: 2

MultipleChoice

A large, listed company in the food and household goods industry needs to raise $50 million for a period of up to 6 months.

It has an excellent credit rating and there is almost no risk of the company defaulting on the borrowings. The company already has a commercial paper programme in place and has a good relationship with its bank.

Which option best is likely to be the most cost effective method of borrowing the money?

Options

ABank overdraft

B6 month term loan

CTreasury Bills

DCommercial paper

Question No: 3

MultipleChoice

Which three of the following are most likely be primary objectives for a newly established, unincorporated entity in the service sector?

Options

AIncreasing the dividend payment year on year

BIncreasing Revenue

CProviding consistently high levels service quality

DMaintaining sufficient liquidity in the business to avoid overtrading

EReaching an optimum capital structure

Question No: 4

MultipleChoice

A listed company has recently announced a profit warning.

The company's share price fell 20% on the day of the announcement but had been fairly static in the weeks leading up to the announcement.

Which form of efficient market is most likely to be indicated by this share price movement?

Options

AWeak form

BSemi-strong form

CStrong form

DRandom walk

Question No: 5

MultipleChoice

A company is concerned about the interest rate that it will be required to pay on a planned bond issue.

It is considering issuing bonds with warrants attached.

Advise the directors Which option best statements about warrants is NOT correct?

Options

AWarrants are a debt sweetener attached to the bond to drive down the interest rate payable on the bond.

BWarrants give the holder the right to buy ordinary shares in the company at a fixed price at a future date.

CWarrants can be sold back to the issuing company for the nominal value of the share if no longer required by the bond holder.

DWarrants can potentially be very expensive because they can involve the issue of shares at a discount in the future if exercised.

Question No: 6

MultipleChoice

A major energy company, GDE, generates and distributes electricity in country

Options

AAnnounce a reduction in the annual dividend to a more sustainable level given the new price controls regime.

AThe government of country A is concerned about rising inflation and has imposed price controls on GDE, limiting the price it can charge per unit of electricity sold to both domestic and commercial customers. It is likely that price controls will continue for the foreseeable future.
The introduction of price controls is likely to reduce the profit for the current year from $3 billion to $1 billion.
The company has:
* Distributable reserves of $2 billion.
* Surplus cash at the start of the year of $1 billion.
* Plans to pay a total dividend of $1.5 billion in respect of the current year, representing a small annual increase as in previous years. However, no dividends have yet been announced.
Which THREE of the following responses would be MOST appropriate for GDE following the imposition of price controls?

BCarry out a wide-ranging review of costs and staffing levels to identify possible cost savings and redundancies.

CActively investigate potential new ways of generating revenue by the sale of related goods and services that are outside the scope of the price controls.

DRaise funds by means of a rights issue in order to maintain historical dividend levels.

EActively look for a private equity investor to introduce new and innovative business and financial strategies to the business.

Question No: 7

MultipleChoice

Acompanyhas 8% convertible bonds in issue. The bonds are convertible in 3 years time at a ratio of 20 ordinary shares per $100 nominal value bond.

Each share:

* has a current market value of $5.60

* is expected to grow at 5% each year

What is the expected conversion valueof each$100nominal value bondin 3 years' time?

Options

A$129.6

B$117.6

C$100.0

D$112.0

Question No: 8

CorrectText

An aerospace company is planning to diversify into car manufacturing.

Relevant data:

What is the the cost of equity to be used in the WACC for the project appraisal?

Give your answer in percentage, as a whole number.

? %

Question No: 9

MultipleChoice

Two companies that operate in the same industry have different Price/Earnings (P/E)ratios as follows:

Which of the following is the most likely explanation of the different P/E ratios?

Options

ACompany B has a greater profit this year than Company A.

BCompany B has higherbusiness risk than Company A.

CCompany B has higher expected future growth than Company A.

DCompany B has higher gearing than Company A.

Free CIMAPRA19-F03-1 Exam Dumps July 2026