CIMA CIMAPRA19-F02-1 Exam Questions Instant Access

Question 1

An entity has declared a dividend of $0.12 a share. The cum dividend market price of one equity share is $1.40.

Assuming a dividend growth rate of 7% a year, what is the entity's cost of equity?

A17.0%

B8.6%

C16.2%

D9.4%

Answer : A

Question 2

LM granted 100 share options to each of its 400 employees on 1 January 20X7. The options will only vest if employees remain with LM for 3 years from the grant date. The fair value of each share option was $5 on 1 January 20X7.

20 employees left in the year to 31 December 20X7 and at that date it was estimated that a further 35 would leave over the following two years.

Which of the following journal entries did LM process to account for the share options in the year to 31 December 20X7, in accordance with IFRS2 Share-based Payments?

ADr Profit or loss $57,500 ; Cr Other reserves within equity $57,500

BDr Profit or loss $57,500 ; Cr Liabilities $57,500

CDr Profit or loss $172,500 ; Cr Other reserves within equity $172,500

DDr Profit or loss $172,500 ; Cr Liabilities $172,500

Answer : A

Question 3

Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.

AOnly provides historic data

BOnly provides financial information

CLimited information to identify trends over time

DProvide only summarised information

EContains complicated information that needs to be summarised

FOnly provides forecast data

Answer : A, B, C, D

Question 4

The yield to maturity of a redeemable bond is calculated as the internal rate of return of the relevant cash flows associated with the bond.

Which TWO of the following are considered relevant cash flows in this calculation?

AThe annual interest payments net of tax relief.

BThe redemption value of the bond at the date of redemption.

CThe market value of the bond now.

DThe nominal value of the bond now.

EThe value of the conversion premium on conversion to equity shares.

Answer : B, C

Question 5

The financial statements ofST at 31 December 20X9 include the following balances in respect of shares classed as equity:

The profit after tax for the yearended 31 December 20X9 is $200,000.

What is ST's basic EPS for the year to 31 December 20X9?

A8.8 cents

B17.5 cents

C20.0 cents

D10.0 cents

Answer : A

Question 6

FGHplansto issue a large number of shares to the public via an IPO.

It isconsideringeitheran offerforsale at a fixed price or an offerforsale by tender.

Which of the following would be an advantage to FGHofusing the offer for sale by tender compared to the fixed price offer?

AThe shareswill be sold to different investors at differing values thus maximising the capital raised.

BThere would be more certainty over the issue price of the shares.

CThere is potential for reaching a higher share price thus maximising capital raised.

DTenders are more attractive to less sophisticated investors thus maximising potential investment.

Answer : C

Question 7

The following information hasbeen extracted from the financialstatements of two single entities, TUV and XYZ,for the year ended 30 September 20X3.

Which of the following options shows thegearing ratios (Debt/Equity) for TUV and XYZ at 30 September 20X3?

AOption

BOption

COption

Answer : A

CIMA F2 Advanced Financial Reporting CIMAPRA19-F02-1 Exam Questions