CIMA Exam CIMAPRA19-F03-1 Topic 4 Question 66 Discussion

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

Question #: 66
Topic #: 4

A private company was formed five years ago and is currently owned and managed by its five founders. The founders, who each own the same number of shares have generally co-operated effectively but there have also been a number of areas where they have disagreed

The company has grown significantly over this period by re-investing its earnings into new investments which have produced excellent returns

The founders are now considering an Initial Public Offering by listing 70% of the shares on the local stock exchange

Which THREE of the following statements about the advantages of a listing are valid?

AReduces agency conflict

BIncreases dividend payouts

CHelps access to wider sources of finance.

DProvides an exit route for the founders

EIncreases the profile and reputation of the business.

Show Suggested Answer

Suggested Answer: C

by Celeste at Mar 23, 2023, 08:48 PM

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Shayne

2 months ago

I heard the founders are planning to name the IPO 'Shares of the Founders' Wealth Extraction Scheme'. Catchy, right?

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Graham

2 days ago

D: Yeah, I heard about the IPO name, it's quite catchy and interesting.

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Nickole

4 days ago

C: I think option E is important too, it would increase the company's profile and reputation.

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Donte

5 days ago

B: I agree, option D would also be a good advantage for the founders.

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Ressie

11 days ago

A: I think option C is definitely valid, it would help the company access more finance.

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Coleen

19 days ago

D: Yeah, those are all great points. It's important to consider all the advantages before making a decision.

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Jose

27 days ago

C: I think option E is important too, it can increase the profile and reputation of the business.

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Wade

1 months ago

B: I agree, option D is also a good advantage, providing an exit route for the founders.

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Shawana

2 months ago

A: I think option C is definitely valid, it can help access wider sources of finance.

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Abraham

2 months ago

Reducing agency conflict? Pfft, that's like trying to herd cats. Good luck with that, Option A.

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Mel

1 months ago

B: Yeah, that's true. It can also provide an exit route for the founders.

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Tiara

1 months ago

A: A listing can help access wider sources of finance.

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Laurel

2 months ago

I believe option E is valid too, as listing can increase the profile and reputation of the business.

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Mitsue

2 months ago

Access to wider sources of finance is crucial for continued growth. Option C is a must-have.

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Denise

2 months ago

Increasing the company's profile and reputation through a public listing is a no-brainer. Option E is spot on.

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Ciara

16 days ago

Reducing agency conflict is essential for smooth operations.

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Therese

17 days ago

An exit route for the founders would provide them with liquidity.

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Dalene

18 days ago

Access to wider sources of finance is also important for expansion.

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Lynsey

24 days ago

I agree, increasing the company's profile is crucial for growth.

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Jolene

2 months ago

I agree with that. Option D is also valid as it provides an exit route for the founders.

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Mammie

2 months ago

The IPO seems like a great opportunity for the founders to cash out and move on to new ventures. Option D is definitely valid.

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Octavio

3 months ago

I think option C is valid because listing can help access wider sources of finance.

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