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CIMAPRA19-F03-1 Exam - Topic 5 Question 48 Discussion

CompanyA is located in Country A, where the currency is the A$.It is listed on the local stock market which was set up 10 years ago.It plans a takeover of Company B, which is located in CountryB where the currency is the B$, and where the stock market has been operating for over 100 years.CompanyA is considering how to finance the acquisition, and how the shareholders of CompanyB might respond to a share exchange or cash (paid in B$).Which of the followingislikely to explain why the shareholders ofCompanyB wouldprefera share exchange as opposed to a cash offer?
D) It would enable them to benefit from the future performance of the combined entity.
A) It would allow them to realise their investment and make a capital gain.
B) It would avoid them being exposed to foreign currency risk.
C) They would receive shares in a market that is likely to be more efficient.

CIMAPRA19-F03-1 Exam - Topic 5 Question 48 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 48
Topic #: 5
[All CIMAPRA19-F03-1 Questions]

CompanyA is located in Country A, where the currency is the A$.

It is listed on the local stock market which was set up 10 years ago.

It plans a takeover of Company B, which is located in CountryB where the currency is the B$, and where the stock market has been operating for over 100 years.

CompanyA is considering how to finance the acquisition, and how the shareholders of CompanyB might respond to a share exchange or cash (paid in B$).

Which of the followingislikely to explain why the shareholders ofCompanyB wouldprefera share exchange as opposed to a cash offer?

Show Suggested Answer Hide Answer
Suggested Answer: D

by Lisha at May 09, 2022, 01:08 AM

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Jessenia
11 months ago
Surprised they’d prefer shares! Isn’t cash more straightforward?
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Kristine
11 months ago
Capital gains sound nice, but what about volatility?
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Natalie
11 months ago
Really? I thought cash was always better.
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Vivienne
11 months ago
Definitely prefer shares over cash in this case.
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Janessa
11 months ago
Share exchange helps avoid currency risk!
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Haydee
12 months ago
This looks like a straightforward question on security standards and implementation specifications. I'll review the options carefully and try to recall the key elements of the standard.
upvoted 0 times
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Elke
12 months ago
Okay, I've got this. When creating a decision operation, you can select a ruleflow, which is the correct answer. The other options don't seem relevant to that specific task.
upvoted 0 times
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Camellia
12 months ago
Hmm, I'm not sure about this one. I'll need to think it through carefully. Maybe I should eliminate the options that don't seem to fit the description.
upvoted 0 times
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Pearline
12 months ago
I'm pretty confident about this one. Using map fragments is definitely the way to go for adding Google Maps to an Android app.
upvoted 0 times
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