QUESTION: 137

What figure will be presented in GHI's consolidated statement of changes in equity for the year ended 31 December 20X4, in respect of dividends paid to non-controlling interest?

$25,000
$125,000
$100,000
$0

Answer(s): A

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RS has issued an instrument with a nominal value of $1 million, at a discount of 2.5%, and a coupon rate of 6%. The terms of the issue are that the instrument must either be redeemed at par, at the option of the holder, in three years' time, or alternatively converted into equity shares in RS. The characteristics of this instrument taken as a whole indicates that it would be classified as which of the following?

Compound instrument
Debt instrument
Equity instrument
Discounted instrument

Answer(s): A

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QUESTION: 139

GG's gearing is currently 50% compared to the industry average of 40% (both measured as debt/equity). GG's debt is all in the form of a single bank loan that is repayable in five years' time. The directors of GG are seeking to raise finance for a new project and they are considering an additional bank loan from the same bank.
Which of the following would prevent the bank from lending the finance for the project in the form of a new bank loan?

A covenant on the existing bank loan that restricts the level of dividend that can be paid.
A projected decrease in interest cover that would breach a covenant on the existing loan.
The revaluation of GG's property that shows an increase in its value since the existing bank loan was taken out.
A projected lack of profits to be able to claim tax relief on the additional interest arising from the new loan.

Answer(s): B

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QUESTION: 140

ST has in issue unquoted 7% debentures which were issued at par and are redeemable in 1 year's time. These debentures cannot be traded. The yield to maturity on these debentures has been calculated at 5%.
Which of the following would explain why the yield to maturity is lower than the coupon?

ST will benefit from the tax relief on the interest payment.
The debentures will be redeemed at a discount to their par value.
The debentures will be redeemed at their par value.
The market value of the debentures must be higher than their par value.

Answer(s): B

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QUESTION: 137

QUESTION: 138

QUESTION: 139

QUESTION: 140

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