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Benefits of the CIMA F3: Financial Strategy Exam
When it comes to the CIMA Professional Qualification, there are levels for everything from operations to management to strategy. Each of these levels is built on three pillars of domain knowledge: Enterprise, Performance, and Financial. A candidate's competence to perform job tasks to the highest standards in the workplace is shown bypassing each level of the qualification. Providing an evidence of managerial competence across the Enterprise, Performance, and Financial dimensions of the qualification. It helps to set standards to recognize individuals who are qualified for promotion or deployment for increased responsibility. Submit a request to a recruiter or work for a reputable organization, and highlight your qualifications. Limited to candidates who have already earned at least one level of the qualification. Buying a membership, you can get a discount on all the certification exams. Extra benefits to all CIMA members. Worried about your career and future? The exam assessments and certification help you prepare for multiple roles within the industry. CIMA F3 exam dumps are the quickest way to study for the exam.
Check out more of our benefits. Choice of two different languages for the test. Verified by a third party. Features of Exam Code: CIMA F3. Increase your knowledge about finance. Sample questions from an actual CIMA F3 exam. Product catalog and detailed product information. Purchase the exam you need. Pay the amount using your credit card. Testing center to ensure a fair environment for candidates. Payment information is available on the order form. Model answers to the most recent questions. Todate, the CIMA has delivered over 10,000 CIMA F3 certifications. View the CIMA F3 exam from any computer or mobile device to ensure a fair environment for candidates. Privacy and confidentiality policy. Software and web applications practice exam. Information about the exam and your rights. Tests are instantly scored and up to date. Score report of the test taker's results are sent to the employer. Markup and take advantage of the company's strategic advantage. Protection of consumer information. Answer and explanations of the questions also available. Understand the CIMA F3 exam and pass it on first attempt. Interactive learning environment.
CIMA F3 Certification Exam, also known as the F3 Financial Strategy exam, is an assessment of an individual's understanding of financial management and strategy. CIMAPRA19-F03-1 exam is designed to test a candidate's knowledge of the principles of financial management and the application of these principles in a strategic context. CIMAPRA19-F03-1 exam is part of the CIMA Professional Qualification, which is recognized globally as a leading qualification in the field of management accounting.
NEW QUESTION # 210
Company A operates in country A with the AS as its functional currency. Company A expects to receive BS500.000 in 6 months' time from a customer in Country B which uses the B$.
Company A intends to hedge the currency risk using a money market hedge
The following information is relevant:
What is the AS value of the BS expected receipt in 6 months' time under a money market hedge?
- A. AS31, 482
- B. AS31, 790
- C. AS32, 532
- D. AS32, 051
Answer: D
NEW QUESTION # 211
A venture capitalist has made an equity investment in a private company and is evaluating possible methods by which it can exit the investment over the next 3 years. The private company shareholders comprise the four original founders and the venture capitalist.
Advise the venture capitalist which THREE of the following methods will enable it to exit its equity investment?
- A. The private company conducts a stock split of its share capital.
- B. The private company buys back the equity shares.
- C. The private company obtains a stock market listing.
- D. The private company undertakes a 1 for 4 rights issue.
- E. Trade sale of shares to an external 3rd party.
Answer: B,C,E
NEW QUESTION # 212
Company A is planning to acquire Company B.
Both companies are listed and are of similar size based on market capitalisation No approach has yet been made to Company B's shareholders as the directors of Company A are undecided about the most suitable method of financing the offer Two methods are under consideration a share exchange or a cash offer financed by debt.
Company A currently has a gearing ratio (debt to debt plus equity) of 30% based on market values. The average gearing ratio (debt to debt plus equity) for the industry is 50% Although no formal offer has been made there have been market rumours of the proposed bid. which is seen as favorable to Company A.
As a consequence. Company As share price has risen over the past few weeks while Company B's share price has fallen.
Which THREE of the following statements are most likely to be correct?
- A. Company B's shareholders will be able to participate in the future growth of the combined business if it is a share exchange
- B. Company A's weighted average cost of capital will fall if financing is with debt
- C. Company A's gearing will increase following a share exchange.
- D. The method of finance chosen will not affect the post-acquisition earning per share of the combined business
- E. Based on current share price movements, a share exchange would mean Company A has to issue fewer shares to acquire Company B than it would have done a few weeks ago
Answer: B,E
NEW QUESTION # 213
Under traditional theory, an increase in a company's WACC would cause the value of the company to:
- A. Stay the same
- B. Increase
- C. Decrease
- D. Either increase or decrease
Answer: C
NEW QUESTION # 214
A company aims to increase profit before interest and tax (PBIT) each year.
The company reports in A$ but has significant export sales priced in B$.
All other transactions are priced in A$.
In 20X1, the company reported:
In 20X2, the only changes expected are:
* An increase in export prices of 10%, but no change to units sold.
* A rise in the value of the B$ to A$/B$ 2.500 (that is, A$ 1 = B$ 2.5) Is it likely that the company would still meet its objective to grow PBIT between 20X1 and 20X2?
- A. No, PBIT would fall by A$ 150 million.
- B. No, PBIT would fall by A$ 48 million.
- C. Yes, PBIT would increase by A$ 150 million.
- D. Yes, PBIT would increase by A$ 48 million.
Answer: B
NEW QUESTION # 215
Company P is a large unlisted food-processing company.
Its current profit before interest and taxation is $4 million, which it expects to be maintainable in the future.
It has a $10 million long-term loan on which it pays interest of 10%.
Corporate tax is paid at the rate of 20%.
The following information on P/E multiples is available:
Which of the following is the best indication of the equity value of Company P?
- A. $48 million
- B. $24 million
- C. $40 million
- D. $80 million
Answer: B
NEW QUESTION # 216
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. Dividend valuation model.
- B. Discounted cash flow analysis at WACC (based on cash flows after tax but before financing) plus the market value of debt.
- C. P/E based valuation using the P/E of a similar company.
- D. Net asset valuation
Answer: A
NEW QUESTION # 217
ZZZ is a listed company based in Brinland. a European country. It is the largest owner and operator of residential care homes for elderly people in Brinland Most of the residential care homes in Brinland are run by small private operators, and the standards of cafe are extremely variable However. 22Z has developed a good reputation because its client service is considered to be extremely good even though its prices are higher than those of most of its competitors.
ZZZ has expanded rapidly in the last few years, partly by acquisition and partly by organic growth consequently, the company's share price now stands at a record high, and the dividend declared at the end of the most recent accounting period was 10% higher than the previous year's dividend.
The Brinland government has recently set up a regulatory body to monitor the residential care homes industry.
The regulatory body is considering introducing a variety of regulations to improve the customer experience in the industry. Following a period of consultation and investigation, the regulatory body is expected to announce a range of new regulations in the near future.
The directors of ZZZ are concerned that the new regulations may adversely affect their company Which THREE of the following new regulations are likely to have the greatest negative impact on ZZTs performance?
- A. Imposition of a one-off "windfall" tax to fund training courses for carers across the industry
- B. Fines for companies that miss specified service level targets
- C. Monopoly controls, forcing large operators to dispose of some care homes
- D. Price controls, setting a maximum price that providers can charge
- E. Imposition of a minimum staff to client ratio.
Answer: B,C,E
NEW QUESTION # 218
Two companies that operate in the same industry have different Price/Earnings (P/E) ratios as follows:
Which of the following is the most likely explanation of the different P/E ratios?
- A. Company B has a greater profit this year than Company A.
- B. Company B has higher gearing than Company A.
- C. Company B has higher expected future growth than Company A.
- D. Company B has higher business risk than Company A.
Answer: C
NEW QUESTION # 219
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. 4.00%
- B. 4.70%
- C. 5.25%
- D. 4.75%
Answer: A
NEW QUESTION # 220
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.
$ ? .
Answer:
Explanation:
8.19, 8.18
NEW QUESTION # 221
Company X plans to acquire Company Y.
Pre-acquisition information:
Post-acquisition information:
Total combined earnings are expected to increase by 10%
Total combined P/E multiple will remain at 10 times
Which of the following share-for-share exchanges will result in an increase of 10% in Company X's share price post-acquisition?
- A. 1 share in Company X for 2 shares in Company Y
- B. 1 share in Company X for 2.75 shares in Company Y
- C. 3 shares in Company X for 5 shares in Company Y
- D. 2 shares in Company X for 1 shares in Company Y
Answer: C
NEW QUESTION # 222
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.
$ ? million
Answer:
Explanation:
56.76, 56.75
NEW QUESTION # 223
A project requires an initial outlay of $2 million which can be financed with either a bank loan or finance lease.
The company will be responsible for annual maintenance under either option.
The tax regime is:
* Tax depreciation allowances can be claimed on purchased assets.
* If leased using a finance lease, tax relief can be claimed on the interest element of the lease payments and also on the accounting depreciation charge.
The trainee management accountant has begun evaluating the lease versus buy decision and has produced the following data. He is not confident that all this information is relevant to this decision.
Using only the relevant data, which of the following is correct?
- A. The bank loan is $20,000 LESS expensive than the finance lease.
- B. The bank loan is $30,000 MORE expensive than the finance lease.
- C. The bank loan is $120,000 LESS expensive than the finance lease.
- D. The bank loan is $70,000 LESS expensive than the finance lease.
Answer: D
NEW QUESTION # 224
A company is owned by its five directors who want to sell the business.
Current profit after tax is $750,000.
The directors are currently paid minimal salaries, taking most of their incomes as dividends.
After the company is sold, directors' salaries will need to be increased by $50,000 each year in total.
A suitable Price/Earnings (P/E) ratio is 7, and the rate of corporate tax is 20%.
What is the value of the company using a P/E valuation?
- A. $5,250,000
- B. $4,970,000
- C. $4,900,000
- D. $5,530,000
Answer: B
NEW QUESTION # 225
An unlisted company has the following data:
A listed company in the same industry has a P/E of 11.
The value of the unlisted company based on the P/E of this listed company is:
Give your answer to the nearest whole number.
- A. 0
- B. 1
Answer: A
NEW QUESTION # 226
Company A plans to diversify by a cash acquisition of Company B an unlisted company in another country (Country B) which operates in a different industrial sector Company A already manufactures its product in Country B and has a loan denominated in Country B's currency Company A regularly suffers foreign exchange losses due to volatility in the exchange rate between the two countries' currencies in recent years.
Which THREE of the following appear to be be valid justifications of this diversification decision?
- A. The diversification will enable Company A to enjoy production scale economies
- B. The diversification will give Company A greater protection from transaction risk.
- C. The diversification will give Company A greater protection from translation risk
- D. The diversification into another product market will lower business risk
- E. The diversification will give Company A protection from political risk
Answer: B,C,E
NEW QUESTION # 227
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. Net asset valuation based on book values.
- B. Framings valuation using the ratio of a multinational oil exploration company
- C. Market capitalisation.
- D. Discounted cash flow valuation
Answer: D
NEW QUESTION # 228
A company has stable earnings of S2 million and its shares are currently trading on a price earnings multiple {PIE) of 10 times. It has10 million shares in issue.
The company is raising S4 million debt finance to fund an expansion of its existing business which is forecast to increase annual earnings straight away by 25% and then remain at that level for the foreseeable future. The corporation tax rate is 20%. It is expected that the P/E will reduce to 8 times over the next year.
What is the most likely change in shareholder wealth resulting from this plan?
- A. Shareholder wealth will increase by $3.2 million.
- B. Shareholder wealth will increase by $5 million
- C. Shareholder wealth will increase by $4 million.
- D. No change in shareholder wealth.
Answer: C
NEW QUESTION # 229
G purchased a put option that grants the right to cap the interest on a loan at 10.0%. Simultaneously, G sold a call option that grants the holder the benefits of any decrease if interest rates fall below 8.5%.
Which THREE possible explanations would be consistent with G's behavior?
- A. G is concerned that interest rates may rise above 10.0%.
- B. G is willing to risk the loss of savings from a fall in interest rates if that offsets the cost of limiting the cost of rises.
- C. G is concerned that interest rates may fall below 10%.
- D. G is concerned that interest rates may rise above 8.5%.
- E. G's strategy is to ensure that its interest rates lie between 8.5% and 10.0%.
Answer: A,B,E
NEW QUESTION # 230
Company A is planning to acquire Company B. Both companies are listed and are of similar size based on market capitalisation No approach has yet been made to Company B's shareholders as the directors of Company A are undecided about the most suitable method of financing the offer Two methods are under consideration a share exchange or a cash offer financed by debt.
Company A currently has a gearing ratio (debt to debt plus equity) of 30% based on market values. The average gearing ratio (debt to debt plus equity) for the industry is 50% Although no formal offer has been made there have been market rumours of the proposed bid. which is seen as favorable to Company A.
As a consequence. Company As share price has risen over the past few weeks while Company B's share price has fallen.
Which THREE of the following statements are most likely to be correct?
- A. Company B's shareholders will be able to participate in the future growth of the combined business if it is a share exchange
- B. Company A's weighted average cost of capital will fall if financing is with debt
- C. Company A's gearing will increase following a share exchange.
- D. The method of finance chosen will not affect the post-acquisition earning per share of the combined business
- E. Based on current share price movements, a share exchange would mean Company A has to issue fewer shares to acquire Company B than it would have done a few weeks ago
Answer: B,E
NEW QUESTION # 231
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.
$ ?
Answer:
Explanation:
4.06, 4.060
NEW QUESTION # 232
B, a European based modern art dealer, frequently imports and sells single high value items created in the United States. The price is fixed at the date of sale but the items are commissioned and made to order with a lead time of three to nine months depending on the individual specification B holds payment for his customers from the point of purchase and passes funds when the items are shipped However, despite putting the money on short term deposit, there have been times when B's profits have been almost entirely eroded by adverse movements m interest rates Advise B by matching the appropriate instrument to B's requirements.
Answer:
Explanation:
NEW QUESTION # 233
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. More of the synergistic benefits of the acquisition will accrue to AB's current shareholders.
- B. EPS Mil Increase
- C. Shareholder control will remain with AB's current shareholders
- D. WACC will increase f credit worthless falls too low, further increasing the returns to shareholders.
- E. Gearing will increase.
Answer: A,B,C
NEW QUESTION # 234
A company is considering either exporting its product directly to customers in a foreign country or establishing a manufacturing subsidiary in that country.
The corporate tax rate in the company's own country is 20% and 25% tax depreciation allowances are available.
Which THREE of the following would be considered advantages of establishing the subsidiary in the foreign country?
- A. Year 1 tax depreciation allowances of 100% are available in the foreign country.
- B. The corporate tax rate in the foreign country is 40%.
- C. There are high customs duties payable on products entering the foreign country.
- D. There is a double tax treaty between the company's domestic country and the foreign country.
- E. There are restrictions on companies wishing to remit profit from the foreign country.
Answer: A,C,D
NEW QUESTION # 235
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