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CIMA Financial Strategy F3 Question # 122 Topic 13 Discussion

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CIMA Financial Strategy F3 Question # 122 Topic 13 Discussion

F3 Exam Topic 13 Question 122 Discussion:
Question #: 122
Topic #: 13

The Board of Directors of Company T is considering a rights issue to fund a new investment opportunity which has a zero NPV.

 

The Board of Directors wishes to explain to shareholders what the theoretical impact on their wealth will be as a result of different possible actions during the rights issue.

 

Which THREE of the following statements in respect of theoretical shareholder wealth are true?
A.

If shareholders exercise their full rights there will be no impact on their wealth.

B.

If the shareholders allow their rights to lapse (do nothing) there will be no impact on their wealth.

C.

If shareholders sell their entire rights entitlement there will be no impact on their wealth.

D.

If the shareholders only partially exercise their rights and allow the remainder to lapse there will be no impact on their wealth.

E.

If shareholders partially exercise their rights and sell the remaining rights entitlement there will be no impact on their wealth.

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Actual exam question for CIMA F3 exam by Ember974 at Aug 3, 2025, 12:00:00 AM

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