Online Access Free FIN Exam Questions
| Exam Code: | FIN |
| Exam Name: | Finance |
| Certification Provider: | CPA |
| Free Question Number: | 80 |
| Posted: | Aug 22, 2026 |
Tamen Group Plc, a large conglomerate with businesses in a variety of different sectors, is considering a bid to acquire one of its manufacturing businesses. The senior managers in charge of the manufacturing businesses would leave Tamen Co in order to run that business as an independent company.
Which of the following terms would best describe this situation?
Aryal plc, a listed public company, received news on 1 June 2004, in the form of a confidential letter, that it had won a contract from the UK government. The new contract is expected to increase profits significantly from 2006 onwards.The news of the contract was not made publicly available until 5 June 2004.
Which one of the following combinations of possible share price reactions would you expect on 5 June 2004 under the semi-strong and strong forms of market efficiency?
Share price reaction
Semi-strongStrong form
A business keeps an item in stock for which demand is 30,000 units per year. The cost of placing an order for the item is $40 and the cost of holding one unit of the item is $0*60 per year. The business uses the economic order quantity (EOQ) approach to derive the optimal order quantity for the item. Demand for the item is even throughout the year.
What is the combined annual cost of stock holding and stock ordering for the item?
A company has convertible loan notes in issue which are due for redemption or conversion in exactly in two years. The interest received on the convertible loan notes is 8% and the investors require a yield of 10%. The convertible loan notes will be converted for 30 shares or redeemed at $105 per $100. The company's shares are currently trading at $3.30 per share.
What is the current market value of the convertible loan notes? (To the nearest $ and ignoring taxation)
Lydia Co is financed by one million $1 ordinary shares trading at $3 each and has $2,000,000 4*25% irredeemable loan notes which have a market value of $85 per $100. Lydia Co pays tax at 30%. An equivalent all-equity financed company would have a cost of capital of 10%.
What is Lydia Co's cost of equity, according to Modigliani and Miller Proposition 2?