CIMA Financial Strategy F3 Question # 26 Topic 3 Discussion

CIMA Financial Strategy F3 Question # 26 Topic 3 Discussion

F3 Exam Topic 3 Question 26 Discussion:
Question #: 26
Topic #: 3

Company WWW is considering making a takeover bid for Company KKA Company KKA's current share price is $5.00

Company WWW is considering either

" A cash payment of $5.75 for each share in Company KKA

" A 5 year corporate bond with a market value of $90 in exchange for 15 shares in Company KKA

Calculate the highest percentage premium which Company KKA shareholders will receive.


A.

Corporate bond premium = 80%


B.

Corporate bond premium = 20%


C.

Cash premium = 10%


D.

Cash premium = 15%


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