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CIMAPRA19-F03-1 Exam - Topic 4 Question 66 Discussion

A private company was formed five years ago and is currently owned and managed by its five founders. The founders, who each own the same number of shares have generally co-operated effectively but there have also been a number of areas where they have disagreedThe company has grown significantly over this period by re-investing its earnings into new investments which have produced excellent returnsThe founders are now considering an Initial Public Offering by listing 70% of the shares on the local stock exchangeWhich THREE of the following statements about the advantages of a listing are valid?
C) Helps access to wider sources of finance.
A) Reduces agency conflict
B) Increases dividend payouts
D) Provides an exit route for the founders
E) Increases the profile and reputation of the business.

CIMAPRA19-F03-1 Exam - Topic 4 Question 66 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 66
Topic #: 4
[All CIMAPRA19-F03-1 Questions]

A private company was formed five years ago and is currently owned and managed by its five founders. The founders, who each own the same number of shares have generally co-operated effectively but there have also been a number of areas where they have disagreed

The company has grown significantly over this period by re-investing its earnings into new investments which have produced excellent returns

The founders are now considering an Initial Public Offering by listing 70% of the shares on the local stock exchange

Which THREE of the following statements about the advantages of a listing are valid?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Celeste at Mar 23, 2023, 08:48 PM

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Aide
8 months ago
Increases dividend payouts? That’s a bit optimistic, don’t you think?
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Lelia
9 months ago
Totally agree, an exit route for founders is a big plus!
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Maricela
9 months ago
Not sure about reducing agency conflict... seems tricky.
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Ma
9 months ago
I think it also increases the profile and reputation of the business!
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Roselle
9 months ago
Listing can definitely help access wider sources of finance.
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Rueben
9 months ago
I practiced a similar question where we talked about exit routes for founders. I think option D makes sense too.
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Louisa
9 months ago
I feel like increasing the profile and reputation of the business is a common reason for going public, so option E seems right to me.
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Evelynn
9 months ago
I'm not so sure about option A. I thought agency conflicts might actually increase with more shareholders involved.
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Winfred
10 months ago
I remember discussing how going public can help access wider sources of finance, so I think option C is definitely valid.
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Amie
10 months ago
Hmm, I'm not too familiar with Jenkins security features. I'll have to think this through carefully and review my notes on Jenkins before answering.
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Avery
10 months ago
Hmm, I'm a bit confused about the campaign hierarchy limit. I'll need to double-check the documentation on that before deciding on the best approach.
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Shayne
1 year ago
I heard the founders are planning to name the IPO 'Shares of the Founders' Wealth Extraction Scheme'. Catchy, right?
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Graham
1 year ago
D: Yeah, I heard about the IPO name, it's quite catchy and interesting.
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Nickole
1 year ago
C: I think option E is important too, it would increase the company's profile and reputation.
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Donte
1 year ago
B: I agree, option D would also be a good advantage for the founders.
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Ressie
1 year ago
A: I think option C is definitely valid, it would help the company access more finance.
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Coleen
1 year ago
D: Yeah, those are all great points. It's important to consider all the advantages before making a decision.
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Jose
1 year ago
C: I think option E is important too, it can increase the profile and reputation of the business.
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Wade
1 year ago
B: I agree, option D is also a good advantage, providing an exit route for the founders.
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Shawana
1 year ago
A: I think option C is definitely valid, it can help access wider sources of finance.
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Abraham
1 year ago
Reducing agency conflict? Pfft, that's like trying to herd cats. Good luck with that, Option A.
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Mel
1 year ago
B: Yeah, that's true. It can also provide an exit route for the founders.
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Tiara
1 year ago
A: A listing can help access wider sources of finance.
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Laurel
1 year ago
I believe option E is valid too, as listing can increase the profile and reputation of the business.
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Mitsue
1 year ago
Access to wider sources of finance is crucial for continued growth. Option C is a must-have.
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Denise
1 year ago
Increasing the company's profile and reputation through a public listing is a no-brainer. Option E is spot on.
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Ciara
1 year ago
Reducing agency conflict is essential for smooth operations.
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Therese
1 year ago
An exit route for the founders would provide them with liquidity.
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Dalene
1 year ago
Access to wider sources of finance is also important for expansion.
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Lynsey
1 year ago
I agree, increasing the company's profile is crucial for growth.
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Jolene
1 year ago
I agree with that. Option D is also valid as it provides an exit route for the founders.
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Mammie
1 year ago
The IPO seems like a great opportunity for the founders to cash out and move on to new ventures. Option D is definitely valid.
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Octavio
1 year ago
I think option C is valid because listing can help access wider sources of finance.
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