CPA Finance - FIN Exam Questions
QUESTION NO: 1
The following two statements have been made on the propositions which underpin the capital asset pricing model (CAPM).
1.Investors in shares require a return in excess of the risk-free rate to compensate for systematic risk.
2.Investors will require higher returns from shares in companies where the level of systematic risk is higher.
Which one of the following combinations (true/false) is correct?
Statement
The following two statements have been made on the propositions which underpin the capital asset pricing model (CAPM).
1.Investors in shares require a return in excess of the risk-free rate to compensate for systematic risk.
2.Investors will require higher returns from shares in companies where the level of systematic risk is higher.
Which one of the following combinations (true/false) is correct?
Statement
Correct Answer: A
QUESTION NO: 2
Which of the following results 'issue of new shares' directly to the public?
Which of the following results 'issue of new shares' directly to the public?
Correct Answer: D
QUESTION NO: 3
Which ONE of the following methods of investment appraisal is consistent with the objective of shareholder wealthmaximization?
Which ONE of the following methods of investment appraisal is consistent with the objective of shareholder wealthmaximization?
Correct Answer: C
QUESTION NO: 4
Consider the following types of financial instruments:
1.Equity shares
2.Forward interest rate agreements
3.Convertible bonds
4.Cash deposits
Which of the above are regarded as primary financial instruments?
Consider the following types of financial instruments:
1.Equity shares
2.Forward interest rate agreements
3.Convertible bonds
4.Cash deposits
Which of the above are regarded as primary financial instruments?
Correct Answer: D
QUESTION NO: 5
Which of the following best describes the Stock Exchange?
Which of the following best describes the Stock Exchange?
Correct Answer: B
QUESTION NO: 6
A company has convertible loan notes in issue which are due for redemption or conversion in exactly in two years. The interest received on the convertible loan notes is 8% and the investors require a yield of 10%. The convertible loan notes will be converted for 30 shares or redeemed at $105 per $100. The company's shares are currently trading at $3.30 per share.
What is the current market value of the convertible loan notes? (To the nearest $ and ignoring taxation)
A company has convertible loan notes in issue which are due for redemption or conversion in exactly in two years. The interest received on the convertible loan notes is 8% and the investors require a yield of 10%. The convertible loan notes will be converted for 30 shares or redeemed at $105 per $100. The company's shares are currently trading at $3.30 per share.
What is the current market value of the convertible loan notes? (To the nearest $ and ignoring taxation)
Correct Answer: A
QUESTION NO: 7
Company X pays an annual cash return to shareholders of 40 cents per share and this is expected to continue in perpetuity. The risk-free rate of return is 6% and the current average market rate of return is 10%. Company X's coefficient is 1.1.
What is the expected return from Company X, and what would be the predicted market value of company's shares?
Company X pays an annual cash return to shareholders of 40 cents per share and this is expected to continue in perpetuity. The risk-free rate of return is 6% and the current average market rate of return is 10%. Company X's coefficient is 1.1.
What is the expected return from Company X, and what would be the predicted market value of company's shares?
Correct Answer: D
QUESTION NO: 8
The following amounts are taken from a company's latest financial statements:
Sales revenue$3,074,000 Cost of Sales$1,884,000 Inventories$160,000 Trade receivables$514,000 Trade Payables$325,000
Based on the above amounts, what is the cash cycle of the company? (Assume one year is 365 days)
The following amounts are taken from a company's latest financial statements:
Sales revenue$3,074,000 Cost of Sales$1,884,000 Inventories$160,000 Trade receivables$514,000 Trade Payables$325,000
Based on the above amounts, what is the cash cycle of the company? (Assume one year is 365 days)
Correct Answer: D
