Exam F3 Topic 6 Question 227 Discussion
Actual exam question for CIMA's F3 exam
Question #: 227
Topic #: 6
Question #: 227
Topic #: 6
A government is currently considering the privatisation of the national airline. The shares are to be offered to the public via a fixed price Initial Public Offering (IPO).
Which THREE of the following statements are correct?
Which THREE of the following statements are correct?
Suggested Answer: A,B,C Vote an answer
A). An IPO is normally underwritten - Correct. For a fixed-price IPO, underwriters usually guarantee that the issue will be taken up, giving certainty of proceeds.
B). The government will receive significant financial resources from the sale - Correct. In a privatisation, the government is selling its ownership stake; the cash from selling these shares flows to the government.
C). The national airline employees will no longer be public sector employees - Correct. Once privatised, the airline becomes a private-sector company; its staff cease to be public-sector employees.
D is incorrect: a fixed-price offer does not guarantee maximum proceeds - the shares are often deliberately underpriced to ensure the issue is fully subscribed.
E is incorrect: in this scenario the proceeds go to the government as seller of existing shares, not directly to the airline itself.
B). The government will receive significant financial resources from the sale - Correct. In a privatisation, the government is selling its ownership stake; the cash from selling these shares flows to the government.
C). The national airline employees will no longer be public sector employees - Correct. Once privatised, the airline becomes a private-sector company; its staff cease to be public-sector employees.
D is incorrect: a fixed-price offer does not guarantee maximum proceeds - the shares are often deliberately underpriced to ensure the issue is fully subscribed.
E is incorrect: in this scenario the proceeds go to the government as seller of existing shares, not directly to the airline itself.
by Hyman at Feb 17, 2026, 07:46 AM
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