QUESTION: 93

Which THREE of the following would be most important if a hospital wishes to review the effectiveness of its services?

The proportion of surgical procedures that are deemed to be successful.
Average waiting times for treatment.
Patient satisfaction ratings.
Staff costs compared to previous years.
Revenue generated from car park charges.

Answer(s): A,B,C

The competition authorities are investigating the takeover of Company Z by a larger company, Company Y.

Both companies are food retailers.

The takeover terms involve using a part cash, part share exchange means of payment.

Company Z is resisting the bid, arguing that it undervalues its business, while lobbying extensively among politicians to sway public opinion against the bidder.

Which of the following actions by Company Y is most likely to persuade the competition authorities to approve the acquisition?

Company Y increases the cash element of its bid offer.
Company Y agrees to dispose of specified outlets which geographically overlap those of Company Z.
Company Y guarantees to preserve employment at its cental distribution depot.
Company Y undertakes to pass on any cost savings to customers.

Answer(s): B

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QUESTION: 95

A company has a cash surplus which it wishes to distribute to shareholders by a share repurchase rather than paying a special dividend.

Which THREE of the following statements are correct?

The payment of a special dividend could raise shareholders' expectations of similar distributions in the future, unlike a share repurchase.
The share repurchase could send a negative signal to shareholders as it could be interpreted as a failure of management to find suitable investment opportunities.
Determination of the repurchase price will be easy as shareholders will insist on receiving the open market price.
Different tax regimes could result in shareholders having a preference for a share repurchase due to the often more preferential tax treatment of capital gains.
The share repurchase, if approved by the shareholders, will be binding on all of the company's shareholders.

Answer(s): A,B,D

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QUESTION: 96

A company is deciding whether to offer a scrip dividend or a cash dividend to its shareholders.

Although the company has excellent long-term growth prospects, it is experiencing short- term profit and cash flow problems.

Which of the following statements is most likely to be a reason for choosing the scrip dividend?

It is a way of raising additional finance to promote future growth.
It is a way of increasing earnings per share.
It is a way of encouraging shareholders to allow cash to be retained in the business.
It is a way of increasing dividend per share.

Answer(s): C

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QUESTION: 96