CIMA F3 Exam With Confidence Using Practice Dumps

In semi-strong form market efficiency, share prices reflect all publicly available information, and they react quickly and unbiasedly to new public announcements.

Here, the share price was fairly static before the profit warning, then fell 20% on the day of the announcement. That suggests:

The market did not know this bad news beforehand.

When the profit warning was announced (new public info), the price immediately adjusted.

That is classic semi-strong efficiency behaviour.

Weak form only says prices reflect past price data, not necessarily public news.

Strong form would imply even insider information is already reflected, so you might have seen movement before the announcement.

“Random walk” describes the pattern of price movements, not a level of efficiency in this context.

The bid is hostile and partly for diversification. Directors’ primary duty is to shareholders: they should explain why they believe the company is undervalued (e.g. unannounced plans and cash). Changing articles or using defensive payouts is poor governance; competition concerns are unlikely to be central here.

Answer: A. Write to shareholders explaining fully why the company's share price is undervalued.

A P/E valuation should use forecast sustainable earnings, not just the last year’s profit. ✅ (C)

The “E” in P/E is earnings after interest and tax, not profit before interest and tax. ✅ (D)

The P/E multiple should be based on comparable companies in the same sector, not the whole market. ✅ (E)

Statement A is wrong (unlisted companies usually get a discount, not an uplift).

Statement B is wrong (P/E gives an equity value, not whole entity value).

Answer Q34: C, D, E