These are ACCA F9 (FM) Financial Management MCQs for Part-E of the Syllabus “Business finance”.

These multiple-choice questions (MCQs) are designed to help ACCA F9 students to better understand the exam format. We aim to instill in students the habit of practicing online for their CBE exams. By doing so, students can reduce exam stress and prepare more effectively.

Please note:

Students should not attempt these MCQs until they have finished the entire chapter.
All questions are compulsory, so please do not skip any.

We hope that these MCQs will be a valuable resource for students preparing for the ACCA F9 (FM) exam.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course:	ACCE – Association of Chartered Certified Accountants
Fundamental Level:	Applied Skills
Subject:	Financial Management
Paper:	F9 – FR
Chapter and Topic	Sources of, and raising, business finance, Estimating the cost of capital, Sources of finance and their relative costs, Capital structure theories and practical considerations, Finance for small- and medium-sized entities (SMEs)
Questions:	Tulip Co
Syllabus Area:	E – “Business finance”
Questions Type:	CBE MCQs
Exam Section:	Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part E of the Syllabus; “Business finance” of ACCA F9 (FM) Financial Management Module.

Time

These MCQs are not time-bound. Take your time and solve them without stress. Pay proper attention and focus. Do not rush or hesitate

Result

Students will get their F9 CBE MCQs Test results after they finish the entire test. They will also be able to see the correct and incorrect answers, as well as explanations for the incorrect questions.

Types of Questions

MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

Keywords

QUESTION – BRT Co – (01/01)

0 votes, 0 avg

F9 (FM) - Part E - MCQs - Tulip Co

Course: ACCA - Association of Chartered Certified Accountants
Subject: F9 (FM) - Financial Management
Syllabus Area: E - Business Finance
Chapter: 12 Sources of finance, 13 Dividend policy, 14 The cost of capital, 15 Gearing and capital structure, 16 Capital structure
Exam Section: Section B
Question Name: Tulip Co
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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REQUEST

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1 / 5

The following scenario relates to questions 1–5.

CASE SCENARIO

Tulip Co is a large company with an equity beta of 1.05. The company plans to expand existing business by acquiring a new factory at a cost of $20 million. The finance for the expansion will be raised from an issue of 3% loan notes, issued at nominal value of $100 per loan note. These loan notes will be redeemable after five years at nominal value or convertible at that time into ordinary shares in Tulip Co with a value expected to be $115 per loan note.

The risk-free rate of return is 2.5% and the equity risk premium is 7.8%.

Tulip Co is seeking additional finance and is considering using Islamic finance and, in particular, would require a form which would be similar to equity financing.

REQUIREMENT

Regarding Tulip Co’s interest in Islamic finance, which of the following statements is/are correct?

Murabaha could be used to meet Tulip Co’s financing needs
Mudaraba involves an investing partner and a managing or working partner

Both 1 and 2

Neither 1 nor 2

1 only

2 only

2 / 5

The following scenario relates to questions 1–5.

CASE SCENARIO

The risk-free rate of return is 2.5% and the equity risk premium is 7.8%.

Tulip Co is seeking additional finance and is considering using Islamic finance and, in particular, would require a form which would be similar to equity financing.

REQUIREMENT

Which of the following statements about equity finance is correct?

Equity finance includes both ordinary shares and preference shares.

Additional equity finance can be raised by rights issues and bonus issues.

Retained earnings are a source of equity finance.

Equity finance reserves represent cash which is available to a company to invest.

3 / 5

The following scenario relates to questions 1–5.

CASE SCENARIO

The risk-free rate of return is 2.5% and the equity risk premium is 7.8%.

Tulip Co is seeking additional finance and is considering using Islamic finance and, in particular, would require a form which would be similar to equity financing.

REQUIREMENT

In relation to using the dividend growth model to value Tulip Co, which of the following statements is correct?

The model assumes that capital markets are semi-strong form efficient.

The model assumes that all shareholders of Tulip Co have the same required rate of return.

The model assumes a constant share price and a constant dividend growth for Tulip Co.

The model assumes that Tulip Co’s interim dividend is equal to the final dividend.

4 / 5

The following scenario relates to questions 1–5.

CASE SCENARIO

The risk-free rate of return is 2.5% and the equity risk premium is 7.8%.

Tulip Co is seeking additional finance and is considering using Islamic finance and, in particular, would require a form which would be similar to equity financing.

REQUIREMENT

Using estimates of 5% and 6%, what is the cost of debt of the convertible loan notes?

5.2%

5.7%

3.0%

6.9%

5 / 5

The following scenario relates to questions 1–5.

CASE SCENARIO

The risk-free rate of return is 2.5% and the equity risk premium is 7.8%.

Tulip Co is seeking additional finance and is considering using Islamic finance and, in particular, would require a form which would be similar to equity financing.

REQUIREMENT

What is the cost of equity of Tulip Co using the capital asset pricing model?

8.1%

10.7%

10.3%

13.3%