Exam F3 Topic 2 Question 422 Discussion

Actual exam question for CIMA's F3 exam
Question #: 422
Topic #: 2
Using the CAPM, the expected return for a company is 11%. The market return is 8% and the risk free rate is
2%.
What does the beta factor used in this calculation indicate about the risk of the company?

Suggested Answer: A Vote an answer

Likely outcomes after two listed companies in the same industry merge:
A). Increase in customer base - yes, customers of both firms now belong to the combined entity.
B). Competition authorities step in to stop... - that usually happens before or to prevent the merger, not "after it has happened", so not chosen.
C). Decrease in employee motivation due to internal changes - very common effect of mergers (uncertainty, restructuring).
D). Changes to supplier relationships owing to internal changes - the merged firm will have different bargaining power and processes; very likely.
E). Cost savings from synergistic benefits and economies of scale - one of the main motives for merger.

by Marcus at Jan 26, 2026, 08:19 PM

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