CIMA Exam 2023 F3 Dumps Updated Questions UPDATED May-2023
Get The Most Updated F3 Dumps To CIMA Strategic level Certification
The CIMA F3 exam is a computer-based test that assesses a candidate's knowledge related to financial management. The exam is in three sections, which focus on topics such as financial strategy, financial risk management, and financial instruments. The F3 module evaluates a candidate's ability to analyze business situations and provide financial strategies for implementation. Additionally, it assesses a candidate's knowledge of financial instruments, including derivatives, and their ability to manage financial risk in various organizational contexts.
The CIMA F3 (Financial Strategy) certification exam is an essential qualification for those seeking a career in financial management. The exam is designed to test candidates' knowledge and understanding of financial strategy and its implementation in the business environment. The exam is challenging and requires significant preparation, but passing it can provide significant career benefits.
The CIMAPRA19-F03-1 exam consists of objective test questions and is administered using computer-based testing (CBT) technology. The exam is divided into two sections, each lasting 90 minutes, and consists of 60 multiple-choice questions. The first section covers financial strategy formulation, while the second section covers financial strategy implementation and evaluation. Candidates must pass both sections to earn the certification.
NEW QUESTION # 79
A company is in the process of issuing a 10 year $100 million bond and is considering using an interest rate swap to change the interest profile on some or all of the $100 million new finance.
The company has a target fixed versus floating rate debt profile of 1:1. Before issuing the bond its debt profile was as follows:
Which of the following is the most appropriate interest rate swap structure for the company?
- A. Receive fixed pay floating interest rate swap for $50 million.
- B. Receive fixed pay floating interest rate swap for $100 million.
- C. Pay fixed receive floating interest rate swap for $50 million.
- D. Pay fixed receive floating interest rate swap for $100 million.
Answer: A
NEW QUESTION # 80
KKL is a listed sports clothing company with three separate business units. KKL is seeking to sell TT', one of these business units TTP cwns a new. brand of trail running shoes that have Droved hugely popular with lone distance runners.
The management team of TTP are frustrated by the constraints imposes b/ KKL in managing tie brand and developing. the bus ness and they believe that TTF has huge growth potential.
The management team of TTP have approached KKL with a proposal to purchase 1~P through a management layout (MDO). KKL has accepted this proposal as TTP has not proved to be a good fit' with the rest of the business and has agreed on the selling price.
Which THREE of the following factors a-e mast Likely to affect the success of the MBO?
- A. The constraints imposed by KKL managing TTF's brand.
- B. The ability of the TTF management team to take over the head office functions successfully.
- C. Searing sufficient. funding for the MBO.
- D. The ability the TTP management team to develop the brand and achieve the expected growth.
- E. The motivation of the TTP management team to invest in future growth.
Answer: B,C,D
NEW QUESTION # 81
Listed company R is in the process of making a cash offer for the equity of unlisted company S.
Company R has a market capitalisation of $200 million and a price/earnings ratio of 10.
Company S has a market capitalisation of $50 million and earnings of $7 million.
Company R intends to offer $60 million and expects to be able to realise synergistic benefits of $20 million by combining the two businesses. This estimate excludes the estimated $8 million cost of integrating the two businesses.
Which of the following figures need to be used when calculating the value of the combined entity in $ millions?
- A. 7, 10, 20, 50, 200
- B. 20, 50, 60, 200
- C. 8, 20, 50, 60, 200
- D. 8, 20, 50, 200
Answer: C
Explanation:
Calculation_F0
Calc_Set1
NEW QUESTION # 82
A listed company is planning a share repurchase.
The following data applies:
* There are 10 million shares in issue
* The share repurchase will involve buying back 20% of the shares at a price of $0.75
* The company is holding $2 million cash
* Earnings for the current year ended are $2 million
The Directors are concerned about the impact that this repurchase programme will have on the company's cash balance and current year earnings per share (EPS) ratio.
Advise the directors which of the following statements is correct?
- A. The cash balance will decrease by 75% and EPS will decrease by 25%.
- B. The cash balance will decrease by 20% and the EPS will increase by 25%.
- C. The cash balance will decrease by 75% and EPS will increase by 25%.
- D. The cash balance will decrease by 20% and the EPS will decrease by 25%.
Answer: C
NEW QUESTION # 83
KKL is a listed sports clothing company with three separate business units. KKL is seeking to sell TT', one of these business units
TTP cwns a new. brand of trail running shoes that have Droved hugely popular with lone distance runners. The management team of TTP are frustrated by the constraints imposes b/ KKL in managing tie brand and developing. the bus ness and they believe that TTF has huge growth potential.
The management team of TTP have approached KKL with a proposal to purchase 1~P through a management layout (MDO). KKL has accepted this proposal as TTP has not proved to be a good fit' with the rest of the business and has agreed on the selling price.
Which THREE of the following factors a-e mast Likely to affect the success of the MBO?
- A. The constraints imposed by KKL managing TTF's brand.
- B. The ability of the TTF management team to take over the head office functions successfully.
- C. Searing sufficient. funding for the MBO.
- D. The ability the TTP management team to develop the brand and achieve the expected growth.
- E. The motivation of the TTP management team to invest in future growth.
Answer: B,C,D
NEW QUESTION # 84
A company currently has a 5.25% fixed rate loan but it wishes to change the interest style of the loan to variable by using an interest rate swap directly with the bank.
The bank has quoted the following swap rate:
* 4.50% - 455% in exchange for Libor
Libor is currently 4%.
If the company enters into the swap and Libor remains at 4%. what will the company's interest cost be?
- A. 5.25%
- B. 4.00%
- C. 4.75%
- D. 4.70%
Answer: B
NEW QUESTION # 85
Z wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate it pays. Z can borrow floating at Libor ' 1, and fixed at 10%.
Which of the following companies would be the most appropriate for Z to enter into a swap with?
- A. Company E - it can borrow floating at L +1 1/2 and fixed at 12%
- B. Company A - it can borrow floating L +1 1/2 and fixed at 9.5%
- C. Company C - it can borrow at L +1 1/2 and fixed at 9%
- D. Company D - it can borrow at L +1 1/2 and fixed at 10.5%
Answer: C
NEW QUESTION # 86
A company enters into a floating rate borrowing with interest due every 12 months over the five year life of the borrowing.
At the same time, the company arranges an interest rate swap to swap the interest profile on the borrowing from floating to fixed rate.
These transactions are designated as a hedge for hedge accounting purposes under IAS 39 Financial Instruments: Recognition and Measurement.
Assuming the hedge is considered to be effective, how would the swap be accounted for 12 months later?
- A. The swap would be shown at fair value the statement of financial position and the change in value posted to other comprehensive income.
- B. The swap would be shown at fair value the statement of financial position and the change in value posted to profit or loss.
- C. The swap would be shown at nominal value in the statement of financial position and the change in value posted to other comprehensive income.
- D. The swap would be shown at nominal value in the statement of financial position and the change in value posted to profit or loss.
Answer: A
NEW QUESTION # 87
An unlisted company operates in a niche market, exploring the west coast of Africa for new oiI reservoirs.
The oil exploration program has been successful in recent years and t now has a substantial amount of oil reserves with a high level of certainty of being recoverable Under financial reporting regulations, oil still in the ground is not recognised as an asset unit is extracted.
The expense of the exploration program has used up all the company's available cash resources.
The company has denied to list or a stock market and raise finds through an initial public offering to finance its drilling program.
Which of the following valuation methods in the appropriate to use in calculating an initial listing price for this company?
- A. Framings valuation using the ratio of a multinational oil exploration company
- B. Market capitalisation.
- C. Net asset valuation based on book values.
- D. Discounted cash flow valuation
Answer: D
NEW QUESTION # 88
A company is deciding whether to offer a scrip dividend or a cash dividend to its shareholders.
Although the company has excellent long-term growth prospects, it is experiencing short-term profit and cash flow problems.
Which of the following statements is most likely to be a reason for choosing the scrip dividend?
- A. It is a way of raising additional finance to promote future growth.
- B. It is a way of increasing earnings per share.
- C. It is a way of encouraging shareholders to allow cash to be retained in the business.
- D. It is a way of increasing dividend per share.
Answer: C
NEW QUESTION # 89
Company A, a listed company, plans to acquire Company T, which is also listed.
Additional information is:
* Company A has 100 million shares in issue, with market price currently at $8.00 per share.
* Company T has 90 million shares in issue,. with market price currently at $5.00 each share.
* Synergies valued at $60 million are expected to arise from the acquisition.
* The terms of the offer will be 2 shares in A for 3 shares in B.
Assuming the offer is accepted and the synergies are realised, what should the post-acquisition price of each of Company A's shares be?
Give your answer to two decimal places.
$ ? .
- A. 8.19, 8.18
- B. 8.19, 6.18
Answer: A
NEW QUESTION # 90
A private company manufactures goods for export, the goods are priced in foreign currency B$.
The company is partly owned by members of the founding family and partly by a venture capitalist who is helping to grow the business rapidly in preparation for a planned listing in three years' time.
The company therefore has significant long term exposure to the B$.
This exposure is hedged up to 24 months into the future based on highly probable forecast future revenue streams.
The company does not apply hedge accounting and this has led to high volatility in reported earnings.
Which of the following best explains why external consultants have recently advised the company to apply hedge accounting?
- A. To fully adopt IFRS in preparation for listing the company.
- B. To make it easier for the market to value the business when it is listed on the Stock Exchange.
- C. To provide a more appropriate earnings figure for use in calculating the annual dividend.
- D. To ensure that the venture capitalist receives regular annual returns on its investment.
Answer: B
NEW QUESTION # 91
Company AD is planning to acquire Company DC. It is evaluating two methods of structuring the terms of the bid, which will be ether a debt-funded cash offer or a share exchange The following Information is relevant
* The two companies are of similar size and in related industries
* AB's gearing ratio measured as debt to debt plus equity, is currently 30% based on market values. This Is the company's optimum capital structure set to reflect the risk appetite of shareholders.
* The combined company is expected to generate savings and synergies
Which THREE of the following are advantages to AB's shareholders of a debt-funded cash offer compared with a share exchange?
- A. Shareholder control will remain with AB's current shareholders
- B. EPS Mil Increase
- C. WACC will increase f credit worthless falls too low, further increasing the returns to shareholders.
- D. More of the synergistic benefits of the acquisition will accrue to AB's current shareholders.
- E. Gearing will increase.
Answer: A,B,D
NEW QUESTION # 92
A company's main objective is to achieve an average growth in dividends of 10% a year.
In the most recent financial year:
Sales are expected to grow at 8% a year over the next 5 years.
Costs are expected to grow at 5% a year over the next 5 years.
What is the minimum dividend payout ratio in 5 years' time that would allow the company to achieve its objective?
- A. 27.5%
- B. 21.7%
- C. 30.0%
- D. 22.5%
Answer: B
NEW QUESTION # 93
Which TIIRCC of the following are most likely to reduce the long term credit rating co a company?
- A. Disposal of a loss-making division where the funds raised will be used to pay a special dividend to shareholders.
- B. Loss of a major customer that contributed 30% of sales revenue.
- C. The issue of a new bond where the funds raised are invested in a project that has an NPV of nil.
- D. The issue of new shares where the funds raised are invested in expanding into a new nigh risk market.
- E. The issue of new shares where the funds raised are invested in a project that has an NPV of nil.
Answer: A,B,C
NEW QUESTION # 94
An aerospace company is planning to diversify into car manufacturing.
Relevant data:
What is the the cost of equity to be used in the WACC for the project appraisal?
Give your answer in percentage, as a whole number.
Answer:
Explanation:
19%
NEW QUESTION # 95
A listed company is planning to raise $21.6 million to finance a new project with a positive net present value of $5 million. The finance is to be raised via a rights issue at a 10% discount to the current share price. There are currently 100 million shares in issue, trading at $2.00 each.
Taking the new project into account, what would the theoretical ex-rights price be?
Give your answer to two decimal places.
Answer:
Explanation:
$ ?
2.02, 2.03
NEW QUESTION # 96
Holding cash in excess of business requirements rather than returning the cash to shareholders is most likely to result in lower:
- A. net profit.
- B. return on equity.
- C. liquidity.
- D. vulnerability to a takeover bid.
Answer: B
NEW QUESTION # 97
TU has relatively few tangible assets and is dependent for profits and growth on the high-value individuals it employs. Which of the following statements best explains why the net asset valuator method's considered unstable for TU?
- A. TU does not account for its tangible assets
- B. TU accounts for its intangible assets at net realisable value.
- C. TU does not account for its intangible assets.
- D. TU accounts for its intangible assets at historical value.
Answer: C
NEW QUESTION # 98
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 # 99
A company generates and distributes electricity and gas to households and businesses.
Forecast results for the next financial year are as follows:
The Industry Regulator has announced a new price cap of $2.00 per Kilowatt.
The company expects this to cause consumption to rise by 15% but costs would remained unaltered.
The price cap is expected to cause the company's net profit to fall to:
- A. $164.00 million profit
- B. $8.75 million profit
- C. $126.50 million loss
- D. $43.00 million profit
Answer: A
NEW QUESTION # 100
An unlisted company.
* Is owned by the original founders and members of their families
* Pays annual dividends each year depending on the cash requirements of the dominant shareholders.
* Has earnings that are highly sensitive to underlying economic conditions.
* Is a small business in a large Industry where there are listed companies with comparable capital structures
Which of the following methods is likely to give the most accurate equity value for this unlisted company?
- A. P/E based valuation using the P/E of a similar company.
- B. Net asset valuation
- C. Discounted cash flow analysis at WACC (based on cash flows after tax but before financing) plus the market value of debt.
- D. Dividend valuation model.
Answer: D
NEW QUESTION # 101
Companies L. M N and O:
* are based in a country that uses the RS as its currency
* have an objective to grow operating profit year on year
* have the same total levels of revenue and cost
* trade with companies or individuals in the United States. All import and export trade with companies or individuals in the United States is priced in US$.
Typical import/export trade for each company in a year are as follows:
Which company's growth objective is most sensitive to a movement in the USS / RS exchange rate?
- A. Company M
- B. Company N
- C. Company L
- D. Company O
Answer: C
NEW QUESTION # 102
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