AL Omar plc. has 2 million shares in issue with a current market price of OMR 6 per share. The company wishes to raise funds by way of a 1 for 8 rights issues at OMR 4.50 per share. The theoretical ex-rights price (TERP) calculated from this data is:

(A)OMR 5.83

(B)OMR 6.83

(C)Baisa 0.17

(D)None of the above

A company has 5 million shares in issue with a current market price of OMR 8.50 per share. The company wishes to raise extra funds by way of a 1 for 10 rights issue at OMR 5.60 per share. What is the theoretical ex-rights price (TERP) calculated from this data?

(A)OMR 8.24

(B)OMR 5.86

(C)OMR 7.05

(D)OMR 1.28

3.A company uses the economic order quantity model (EOQ model). Demand for the companys product is 36,000 units each year and is evenly distributed each day. The cost of placing an order is R.O 5 and the cost of holding a unit of stock for a year is R.O 2.40.

How many orders should the company make in a year?

(A)387

(B)93

(C)186

(D)194

14.Which of the following are true?

(i)Ordinary shares offer a lower level of risk than preference shares

(ii)Ordinary shareholders are given priority over the claims of preference shareholders if the business is wound up

(iii)Preference shares receive a fixed rate of dividend

(iv)Ordinary shareholders are normally given voting rights

a)(i) only

b)(iii) and (iv)

c)(ii), (iii) and (iv)

d)(iv) only

Which of the following would a company consider before offering a customer goods on credit?

(i)The honesty and integrity of the customer

(ii)The conditions of the credit being offered

(iii)The customers capacity to pay for the goods acquired

(iv)The state of the industry in which the customer operates

(A)(i)

(B)(ii) and (ii)

(C)(i), (ii) and (iii)

(D)All of the above

17When a loan is being agreed, a loan covenant may be used to:

(A)Protect ordinary shareholders

(B)Protect the borrower

(C)Protect the lender

(D)Protect preference shareholders

1.Which of the following about rights issues is correct?

(A)In a rights issue shares are issued to existing shareholders without payment

(B)In a rights issue additional funds are raised from existing shareholders

(C)A rights issue should theoretically increase the value of the companys shares

(D)The value of a company would reduce following a rights issue