PDF File

Updated CIMAPRA19-F03-1 Practice Questions BY Larsen

Question 1

A company has some 7% coupon bonds in issue and wishes tochangeitsinterest rate profile.

It has decided to do this by entering into a plain coupon interest rate swap with it's bank.

The bank has quoted a swap rate of: 6.0% - 6.5% fixed against LIBOR.

What will the company'snew interest rate profilebe?

  • A. VARIABLE at LIBOR
  • B. VARIABLE at LIBOR + 0.5%
  • C. VARIABLE at LIBOR + 1.0%
  • D. FIXED at 6.5%
Question 2

A profit-seeking company intends to acquire another company for a variety of reasons, primarily toenhanceshareholder wealth.

Which THREE of the following offer the greatest potentialfor enhancingshareholder wealth?

  • A. Achieving more press coverage for the company.
  • B. Creating new opportunities for employees.
  • C. Achieving greater cultural diversity.
  • D. Acquiring Intellectual Property assets.
  • E. Exploiting production synergies.
  • F. Elimination of existing competition.