CIMA Exam CIMAPRA19-F03-1 Topic 3 Question 88 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 88
Topic #: 3

[All CIMAPRA19-F03-1 Questions]

A company needs to raise $20 million to finance a project.

It has decided on a rights issue at a discount of 20% to its current market share price.

There are currently 20 million shares in issuewith a nominal value of $1 and a marketprice of $5per share.

Calculate the terms of the rights issue.

A1 new share for every 4 existing shares

B1 new share for every 20 existing shares

C1 new share for every 5 existing shares

D1 new share for every 25 existing shares

Show Suggested Answer

Suggested Answer: A, B, D

by Lyda at May 30, 2024, 07:00 PM

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2 days ago

I'm not sure, but I think the answer is C) 1 new share for every 5 existing shares. Can someone explain the rationale behind the correct answer?

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5 days ago

I agree with Casie. It makes sense because the company needs to raise $20 million and the discount is 20%.

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10 days ago

I think the answer is A) 1 new share for every 4 existing shares.

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