[Oct 31, 2023] Get to the Top with F3 Practice Exam Questions
Use Real F3 Dumps Free Sample Questions and Practice Test Engine
To prepare for the CIMA CIMAPRA19-F03-1 exam, candidates must have a strong foundation in financial strategy. Candidates should have a good understanding of financial analysis and planning, as well as risk management and investment appraisal. Candidates should also have a good understanding of financial reporting and analysis.
CIMA CIMAPRA19-F03-1 exam is a highly respected financial certification offered by the Chartered Institute of Management Accountants. F3 exam is designed to test the candidate's ability to analyze, evaluate and implement financial strategies in various business scenarios. F3 Financial Strategy certification is globally recognized and is highly valued in the financial industry, making it an essential asset for individuals seeking senior financial management roles in organizations.
CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) Certification Exam is a rigorous and highly respected certification that validates the financial strategy expertise of candidates. F3 exam covers a wide range of financial strategy topics, and is designed to test the candidate's knowledge and skills, as well as their analytical and critical thinking abilities, communication and leadership skills. Candidates who pass the exam and meet the other requirements for certification can use the designation "CIMA" after their name, which demonstrates their expertise in financial strategy and provides access to CIMA's global network of professionals and resources.
NEW QUESTION # 172
A listed company is considering either a one-off special divided or a share repurchase scheme to reduce its surplus cash level.
Identify TWO advantages that a one-off special payment has over a share repurchase scheme.
- A. It allows shareholder a choice of option in or out of the payment.
- B. It is easier to arrange than a share repurchase
- C. It will change balance of share owners.
- D. It would result in a transfer of wealth back to the shareholder
- E. It will reduce the possibility of a hostile takeholder
Answer: B,C
NEW QUESTION # 173
A company raised fixed rate bank finance together with an interest rate swap for the same term and same principal value to pay floating receive fixed rate interest on an annual basis.
Which THREE of the following statements are correct?
- A. The swap contract is normally a contract between a company and a bank.
- B. Under the swap, interest is exchanged every year.
- C. LIBID (London Interbank Bid Rate) is normally used as the reference rate for determining interest due under the swap.
- D. The company has effectively obtained floating rate debt.
- E. On the first day of this arrangement, the company receives the principal borrowed from the bank and pays this across to the swap counterparty.
Answer: A,B,D
NEW QUESTION # 174
A large, quoted company that is all-equity financed is planning to acquire a smaller unquoted company that is also all-equity financed.
The acquiring company's directors are using the dividend valuation model to value the target company before making an offer.
Relevant data for the target company:
* Dividends paid in the last financial year $2 million
* Book value of net assets $15 million
* Shares in issue 1 million
The acquiring company's cost of capital is 10%.
Its directors believe they can improve the target company's performance in the long term.
They estimate there will be no growth in the first year of the acquisition but from year 2 onwards there will be a 4% growth each year in perpetuity.
What is the maximum price the acquiring company should offer for each of the shares in the target company?
- A. $33.33
- B. $15.00
- C. $34.67
- D. $32.78
Answer: A
NEW QUESTION # 175
A company wishes to raise new finance using a rights issue to invest in a new project offering an IRR of 10%
The following data applies:
* There are currently 1 million shares in issue at a current market value of $4 each.
* The terms of the rights issue will be $3.50 for 1 new share for 5 existing shares.
* The company's WACC is currently 8%.
What is the yield-adjusted theoretical ex-rights price (TERP)?
Give your answer to 2 decimal places.
$ ?
- A. 4.06, 4.060
- B. 4.06, 4.050
Answer: A
NEW QUESTION # 176
Company R is a well-established, unlisted, road freight company.
In recent years R has come under pressure to improve its customer service and has had some cusses in doing this However, the cost of improved service levels has resulted In it marketing small losses in its latest financial year. This is the forest time R has not been profitable.
R uses a' residual divided policy ad has paid dividends twice in the last 10 years.
Which of the following methods would be most appropriate for valuating R?
- A. The earnings yield method, adjusting the earnings yield of a listed company downloads to reflect R's unlisted status.
- B. The divided valuation mode.
- C. Valuing the tangible assets and intangible assets of R.D. The P/E method, adjusting the P/E of a listed company downwards to reflect R's unlisted status.
Answer: C
NEW QUESTION # 177
A listed company is financed by debt and equity.
If it increases the proportion of debt in its capital structure it would be in danger of breaching a debt covenant imposed by one of its lenders.
The following data is relevant:
The company now requires $800 million additional funding for a major expansion programme.
Which of the following is the most appropriate as a source of finance for this expansion programme?
- A. Rights issue
- B. Private placement of a bond
- C. Bank overdraft
- D. Retained earnings
Answer: A
NEW QUESTION # 178
Company A plans to acquire Company B in a 1-for-1 share exchange.
Pre-acquisition information is as follows:
Post-acquisition information is as follows:
* Annual earnings are expected to increase by $4 million.
* The P/E multiple of the combined company is expected to be 12 times.
If the acquisition proceeds, what is the expected percentage increase in the post acquisition share price of Company A?
- A. 50%
- B. 6%
- C. 0%
- D. 8%
Answer: C
NEW QUESTION # 179
An entity prepares financial statements to 30 June.
During the year ended 30 June 20X2 the following events occurred:
1 July 20X1
* The entitiy borrowed $100 million at a variable rate of interest.
* In order to protect itself against the variability of its interest cashflows, the entity entered into a pay-fixed-receive-variable interest swap with annual settlements. The fair value of the swap on this date was zero.
30 June 20X2
* The entity received a net settlement of $2 million under the swap. After this net settlement, the fair value of the swap was $5 million - a financial asset.
The entity decides to use hedge accounting for this arrangement and has designated it as a cash flow hedge.
The swap is a perfect hedge of the variability of the cash interest payments.
Which of the following describes the treatment of the settlement and the change in the fair value of the swap in the statement of profit or loss and other comprehensive income for the year ended 30 June 20X2?
- A. $7 million is recognised in profit or loss.
- B. $2 million is recognised in profit or loss and $5 million is recognised in other comprehensive income.
- C. $5 million is recognised in profit or loss and $2 million is recognised in other comprehensive income.
- D. $7 million is recognised in other comprehensive income.
Answer: B
NEW QUESTION # 180
A large, listed company in the food and household goods industry needs to raise $50 million for a period of up to 6 months.
It has an excellent credit rating and there is almost no risk of the company defaulting on the borrowings.
The company already has a commercial paper programme in place and has a good relationship with its bank.
Which of the following is likely to be the most cost effective method of borrowing the money?
- A. Treasury Bills
- B. Bank overdraft
- C. Commercial paper
- D. 6 month term loan
Answer: C
NEW QUESTION # 181
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?
- A. It has lower risk than the average market risk.
- B. It is not possible to tell from CAPM.
- C. It has the same risk as the average market risk.
- D. It has greater risk than the average market risk.
Answer: D
NEW QUESTION # 182
Company W has received an unwelcome takeover bid from Company B.
The offer is a share exchange of 3 shares in Company B for 5 shares in Company W or a cash alternative of $5.70 for each Company W share.
Company B is approximately twice the size of Company W based on market capitalisation. Although the two companies have some common business interested the main aim of the bid is diversification for Company B.
Company W has substantial cash balances which the directors were planning to use to fund an acquisition.
These plans have not been announced to the market.
The following share price information is relevant.
Which of the following would be the most appropriate action by Company W's directors following receipt of this hostile bid?
- A. Pay a one-off special dividend.
- B. Refer the bid to the country's competition authorities.
- C. Change the Articles of Association to increase the percentage of shareholder votes required to approve a takeover.
- D. Write to shareholders explaining fully why the company's share price is under valued.
Answer: D
NEW QUESTION # 183
A company has a cash surplus which it wishes to distribute to shareholders by a share repurchase rather than paying a special dividend.
Which THREE of the following statements are correct?
- A. Different tax regimes could result in shareholders having a preference for a share repurchase due to the often more preferential tax treatment of capital gains.
- B. The payment of a special dividend could raise shareholders' expectations of similar distributions in the future, unlike a share repurchase.
- C. The share repurchase, if approved by the shareholders, will be binding on all of the company's shareholders.
- D. Determination of the repurchase price will be easy as shareholders will insist on receiving the open market price.
- E. The share repurchase could send a negative signal to shareholders as it could be interpreted as a failure of management to find suitable investment opportunities.
Answer: A,B,E
NEW QUESTION # 184
Select the category of risk for each of the descriptions below:
Answer:
Explanation:
NEW QUESTION # 185
A company's latest accounts show profit after tax of $20.0 million, after deducting interest of $5.0 million. The company expects earnings to grow at 5% per annum indefinitely.
The company has estimated its cost of equity at 12%, which is included in the company WACC of 10%.
Assuming that profit after tax is equivalent to cash flows, what is the value of the equity capital?
Give your answer to the nearest $ million.
$ ? million
Answer:
Explanation:
300,
300000000
NEW QUESTION # 186
Company A is based in country A with the AS as its functional currency. It expects to receive BS20 million from Company B in settlement of an export invoice.
The current exchange rate is A$1 =B$2 and the daily standard deviation of this exchange rate = 0 5% What is the one-day 95% VaR in AS?
- A. A$82,250
- B. A$50,000
- C. A$164,500
- D. A$822,500
Answer: A
NEW QUESTION # 187
Company Z has identified four potential acquisition targets: companies A, B, C and D.
Company Z has a current equity market value of $580 million.
The price it would have to pay for the equity of each company is as follows:
Only one of the target companies can be acquired and the consideration will be paid in cash.
The following estimations of the new combined value of Company Z have been prepared for each acquisition before deduction of the cash consideration:
Ignoring any premium paid on acquisition, which acquisition should the directors pursue?
- A. B
- B. D
- C. A
- D. C
Answer: D
NEW QUESTION # 188
A company is wholly equity funded. It has the following relevant data:
* Dividend just paid $4 million
* Dividend growth rate is constant at 5%
* The risk free rate is 4%
* The market premium is 7%
* The company's equity beta factor is 1.2
Calculate the value of the company using the Dividend Growth Model.
Give your answer in $ million to 2 decimal places.
Answer:
Explanation:
$ ? million
56.76, 56.75
NEW QUESTION # 189
......
Pass CIMA F3 exam - questions - convert Tets Engine to PDF: https://www.dumpsactual.com/F3-actualtests-dumps.html
2023 Realistic Verified Free CIMA F3 Exam Questions: https://drive.google.com/open?id=1P00x8uNetZBoxtIVtl5HC5jcifNA7H6p
