Exam F3 Topic 1 Question 355 Discussion
Actual exam question for CIMA's F3 exam
Question #: 355
Topic #: 1
Question #: 355
Topic #: 1
Company ADE is an unlisted company; it needs to raise a significant amount of finance to fund future expansion. The directors are considering listing the company on the local stock exchange The following discussions have taken place between some of the directors:
Director A - We consider a public issue of bonds in the capital markets, we don't need to list to issue the bonds which will save time and money.
Director B - We should list on the Alternative Investment Market (AIM) and not the main market to avoid any regulatory requirements Director C - We should remain unlisted; we can access an unlimited amount of equity finance through a rights issue Director D - Listing will increase Company ADE's ability to raise new equity and debt finance in the future.
Director E - If we list, Company ADE will be a more likely target for a takeover than if we remain unlisted.
Which TWO of the directors' statements are correct?
Director A - We consider a public issue of bonds in the capital markets, we don't need to list to issue the bonds which will save time and money.
Director B - We should list on the Alternative Investment Market (AIM) and not the main market to avoid any regulatory requirements Director C - We should remain unlisted; we can access an unlimited amount of equity finance through a rights issue Director D - Listing will increase Company ADE's ability to raise new equity and debt finance in the future.
Director E - If we list, Company ADE will be a more likely target for a takeover than if we remain unlisted.
Which TWO of the directors' statements are correct?
Suggested Answer: D,E Vote an answer
Director A - You can issue bonds without having listed equity, but a "public issue" of bonds still involves heavy regulation and doesn't remove the need for disclosure. This is not what the question is really getting at
# treat as not correct.
Director B - AIM still has regulatory requirements; they are lighter, not non-existent # incorrect.
Director C - Rights issues are for existing shareholders of (normally) listed companies; an unlisted company cannot raise unlimited equity this way # incorrect.
Director D - Listing improves marketability and visibility and generally increases the ability to raise both equity and debt # correct.
Director E - Listed status makes shares more easily tradable and the company more visible, so it becomes a more likely takeover target # correct.
# treat as not correct.
Director B - AIM still has regulatory requirements; they are lighter, not non-existent # incorrect.
Director C - Rights issues are for existing shareholders of (normally) listed companies; an unlisted company cannot raise unlimited equity this way # incorrect.
Director D - Listing improves marketability and visibility and generally increases the ability to raise both equity and debt # correct.
Director E - Listed status makes shares more easily tradable and the company more visible, so it becomes a more likely takeover target # correct.
by Bartley at May 31, 2026, 04:08 AM
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