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

6 days ago

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

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Abraham

12 days ago

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

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Laurel

14 days ago

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

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Mitsue

15 days ago

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

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Denise

16 days 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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Jolene

17 days ago

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

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Mammie

19 days 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

26 days ago

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

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