A company generates operating profit of $17.2 million, and incurs finance costs of $5.7 million.
It plans to increase interest cover to a multiple of 5-to-1 by raising funds from shareholders to repay some existing debt. The pre-tax cost of debt is fixed at 5%, and the refinancing will not affect this.
Assuming no change in operating profit, what amount must be raised from shareholders?
Give your answer in $ millions to the nearest one decimal place.
$ ?

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A product costs USD10 when purchased in the USA. The same product costs USD12 when it is purchased in the UK and the price in GBP is convened to USD.
Which of the following statement concerning purchasing power parity is correct?

• A.The exchange rate between the USD and GBP will change so that tie price differential on this product (and at other products) is eliminated.
• B.Economic forces should eliminate the price difference. but there could be market imperfections that permit it to persist.
• C.Economic forces will bring the prices in the USA and UK into line.
• D.This type of price deferential is a reliable baas for predicting currency movements

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Which THREE of the following statements are correct in respect of the issuance of debt securities.

• A.Investors in traded bonds have an ownership (or equity stake) in the company which issued the bonds.
• B.Governments are the most frequent issuers of bonds and the proceeds are used to fund government expenditure or service the national debt.
• C.A bond issuer must appoint at least one market-maker to ensure that there is a liquid market in its traded bonds.
• D.A corporate entity coming to the bond market for the first time will find it easier to issue corporate bonds than to arrange a conventional term loan.
• E.The redemption yield on a corporate bond can be determined by calculating the internal rate of return based on the cash flows arising during the duration of the bond.

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A company is preparing an integrated report according to the International <IR> Framework as issued by the International Integrated Reporting Council.
Which THREE of the following should be included in the report?

• A.A summary of the key issues discussed by directors in main board meetings.
• B.A comparison of the key elements of its financial statements with those of its main competitor.
• C.The challenges and uncertainties that the organisation is likely to encounter in pursuing its strategy.
• D.An of how the organisation's governance structure supports its ability to create value in the short, medium and long term.
• E.A detailed analysis of the organisation's business model.

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A major energy company, GDE, generates and distributes electricity in country A.
The government of country A is concerned about rising inflation and has imposed price controls on GDE, limiting the price it can charge per unit of electricity sold to both domestic and commercial customers. It is likely that price controls will continue for the foreseeable future.
The introduction of price controls is likely to reduce the profit for the current year from $3 billion to $1 billion.
The company has:
* Distributable reserves of $2 billion.
* Surplus cash at the start of the year of $1 billion.
* Plans to pay a total dividend of $1.5 billion in respect of the current year, representing a small annual increase as in previous years. However, no dividends have yet been announced.
Which THREE of the following responses would be MOST appropriate for GDE following the imposition of price controls?

• A.Raise funds by means of a rights issue in order to maintain historical dividend levels.
• B.Announce a reduction in the annual dividend to a more sustainable level given the new price controls regime.
• C.Actively investigate potential new ways of generating revenue by the sale of related goods and services that are outside the scope of the price controls.
• D.Carry out a wide-ranging review of costs and staffing levels to identify possible cost savings and redundancies.
• E.Actively look for a private equity investor to introduce new and innovative business and financial strategies to the business.

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