CIMA Exam CIMAPRA19-F03-1 Topic 1 Question 106 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 106
Topic #: 1

[All CIMAPRA19-F03-1 Questions]

Company A plans to acquire Company B in a 1-for-1 share exchange.

Pre-acquisition information is as follows:

Post-acquisition information is as follows:

Annual earnings are expectedto increaseby $4 million.

The P/E multiple of the combined company is expected to be 12 times.

If the acquisition proceeds, whatis theexpected percentage increase inthe post acquisitionshare priceof Company A?

A50%

B8%

C6%

D0%

Show Suggested Answer

Suggested Answer: A, B, D

by Essie at Feb 06, 2025, 10:13 PM

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Marvel

8 days ago

The answer must be B) 8%. The post-acquisition share price is expected to increase due to the $4 million increase in annual earnings and the P/E multiple of 12 times.

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Franklyn

17 days ago

But if the annual earnings are expected to increase by $4 million, then the post acquisition share price should increase significantly, making A) 50% more likely

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Sherly

21 days ago

I disagree, I believe the answer is C) 6%

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Franklyn

24 days ago

I think the answer is A) 50%

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