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NEW QUESTION 32
A company needs to raise $20 million to finance a project.
It has decided on a rights issue at a discount of 20% to its current market share price.
There are currently 20 million shares in issue with a nominal value of $1 and a market price of $5 per share.
Calculate the terms of the rights issue.
- A. 1 new share for every 25 existing shares
- B. 1 new share for every 4 existing shares
- C. 1 new share for every 20 existing shares
- D. 1 new share for every 5 existing shares
Answer: B
NEW QUESTION 33
A company plans to cut its dividend but is concerned that the share price will fall. This demonstrates the _____________ effect
- A. clientele
- B. clientele fall
Answer: A
NEW QUESTION 34
A company aims to increase profit before interest and tax (PBIT) each year.
The company reports in A$ but has significant export sales priced in B$.
All other transactions are priced in A$.
In 20X1, the company reported:
In 20X2, the only changes expected are:
* An increase in export prices of 10%, but no change to units sold.
* A rise in the value of the B$ to A$/B$ 2.500 (that is, A$ 1 = B$ 2.5)
Is it likely that the company would still meet its objective to grow PBIT between 20X1 and 20X2?
- A. Yes, PBIT would increase by A$ 150 million.
- B. No, PBIT would fall by A$ 150 million.
- C. No, PBIT would fall by A$ 48 million.
- D. Yes, PBIT would increase by A$ 48 million.
Answer: C
NEW QUESTION 35
Which of the following explains an aim of integrated reporting in accordance with The International <IR> Framework as issued by the International Integrated Reporting Council?
- A. To highlight the separation of strategy, governance and financial performance in a social, environmental and economic context.
- B. To support decision making and actions that focus on creating value over the short, medium and long term.
- C. To highlight the need for greater reporting of performance to stakeholders in a greater level of detail than at present.
- D. To integrate the various accepted accounting practices of member bodies into a single, unified code of accounting principles.
Answer: B
NEW QUESTION 36
On 31 October 20X3:
* A company expected to agree a foreign currency transaction in January 20X4 for settlement on 31 March
20X4.
* The company hedged the currency risk using a forward contract at nil cost for settlement on 31 March
20X4.
* The transaction was correctly treated as a cash flow hedge in accordance with IAS 39 Financial Instruments: Recognition and Measurement.
On 31 December 20X3, the financial year end, the fair value of the forward contract was $10,000 (asset).
How should the increase in the fair value of the forward contract be treated within the financial statements for the year ended 31 December 20X3?
- A. Not recognised in 20X3 as the gain will be offset by a loss on the hedged transaction.
- B. A $10,000 profit will be recognised within other comprehensive income.
- C. A $10,000 profit will be recognised within the Income Statement.
- D. Not recognised in 20X3 as the forward contract is not settled until after the year end.
Answer: B
NEW QUESTION 37
……