QUESTION: 5

Which of the following is correct in relation to businesses?
In order to maximize shareholder wealth, the primary objective of a business can be reflected in:

(1) higher investment
(2) higher sales revenue
(3) higher share prices
(4) higher dividend payments.

(1) and (3)
(3) and (4)
(1) and (2)
(2) and (4)

Answer(s): B

Reference:

http://www.cimaglobal.com/Documents/Student%20docs/2010%20syllabus%20docs/F3/F3%20May%202014%20-%20Answers%20for%20web.pdf

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QUESTION: 6

FILL BLANK
A business analyst has computed a trend regression for the sales of company X. The following table reports the ratios between the actual quarterly sales of company X and the calculated trend, for a period of four years.

What is the seasonal component in the fourth quarter? Give your answer to three decimal places.

0.563

Answer(s): A

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QUESTION: 7

A business has a contractual requirement to pay a sum of $6m in a foreign currency in 12 months time. It takes out a forward foreign exchange contract for this sum.
This is an example of:

translation risk avoidance
economic risk reduction
arbitrage
hedging

Answer(s): D

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QUESTION: 8

Which THREE of the following businesses are more likely to fare better during a recession? (Choose three.)

A construction company specializing in road infrastructure.
A producer of rice, a staple good.
A producer of automobiles, a durable good.
A producer of security equipment, a counter-cyclical good.
A retailer specializing in fashion, a cyclical good.
A construction company specializing in private residential accommodation.

Answer(s): A,B,D

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QUESTION: 5

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QUESTION: 6

QUESTION: 7

QUESTION: 8