Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMAPRA19-F03-1 Exam - Topic 7 Question 9 Discussion

The Board of Directors of Company T is considering a rights issue to fund a new investment opportunity which has a zero NPV.The Board of Directors wishes to explain to shareholders what the theoretical impact on their wealth will be as a result of different possible actions during the rights issue.Which THREE of the following statements in respect of theoreticalshareholder wealth are true?
A) If shareholders exercise their full rights there will be no impact on their wealth. and C) If shareholders sell their entire rights entitlement there will be no impact on their wealth. and E) If shareholders partially exercise their rights and sell the remaining rights entitlement there will be no impact on their wealth.
B) If the shareholders allow their rights to lapse (do nothing) there will be no impact on their wealth.
D) If the shareholders only partially exercise their rights and allow the remainder to lapse there will be no impact on their wealth.

CIMAPRA19-F03-1 Exam - Topic 7 Question 9 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 9
Topic #: 7
[All CIMAPRA19-F03-1 Questions]

The Board of Directors of Company T is considering a rights issue to fund a new investment opportunity which has a zero NPV.

The Board of Directors wishes to explain to shareholders what the theoretical impact on their wealth will be as a result of different possible actions during the rights issue.

Which THREE of the following statements in respect of theoreticalshareholder wealth are true?

Show Suggested Answer Hide Answer
Suggested Answer: A, C, E

by Xuan at May 08, 2022, 09:33 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRA19-F03-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Royal
8 months ago
E seems right too, partial exercise and selling should keep wealth stable.
upvoted 0 times
...
Blondell
9 months ago
B is definitely false, letting rights lapse usually hurts wealth.
upvoted 0 times
...
Honey
9 months ago
Wait, how can D be true? That sounds off.
upvoted 0 times
...
Agustin
9 months ago
Totally agree, C is also true!
upvoted 0 times
...
Ming
9 months ago
A is true, no impact if they exercise full rights.
upvoted 0 times
...
Shanda
9 months ago
This seems like a tricky question. I'm not sure which phrasing would be the most effective for getting an admission from the suspect. I'll need to think carefully about the different approaches.
upvoted 0 times
...
Brunilda
10 months ago
Okay, I think I've got this. The key is to use the right stream type to handle the average calculation.
upvoted 0 times
...

Save Cancel