CIMA Exam CIMAPRA19-F03-1 Topic 3 Question 60 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 60
Topic #: 3

Which TWO of the following statements about debt instruments are correct?

AA zero coupon will eliminate the tax shield effect on debt payments.

BChanges in corporation tax rates will have no effect on the tax shield of fixed rate debentures.

CThe true cost of servicing debt instruments to the company is the post-tax cost of debt.

DIf corporation tax rates rise, the tax shield effect on debenture interest will be reduced.

Show Suggested Answer

Suggested Answer: A, B

by Glenn at Nov 18, 2022, 08:11 AM

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