CIMA F3 - Financial Strategy exam in just 24 HOURS! 100% REAL EXAM QUESTIONS ANSWERS CIMA F3 - Financial Strategy Buy Complete Questions Answers File from 100% Exam Passing Guarantee & Money Back Assurance Sample Questions

Question No 1: Which THREE of the following remain unchanged over the life of a 10 year fixed rate bond? A.The coupon rate B.The yield C.The market value D.The nominal value E.The amount payable on maturity Answer: A, D, E Question No 2: Companies A, B, C and D:  Are based in a country that uses the K$ 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 eurozone. All import and export trade with companies or individuals in the eurozone is priced in EUR. 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 EUR/K$ exchange rate? A.Company A B.Company B C.Company C D.Company D Answer: B Question No 3: A company currently has a 6.25% 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: 5.50% % in exchange for LIBOR LIBOR is currently 5%. If the company enters into the swap and LIBOR remains at 5%, what will the company's interest cost be?

A. 5.00% B. 5.75% C. 5.70% D. 6.25% Answer: B Question No 4: 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 provide a more appropriate earnings figure for use in calculating the annual dividend. B.To make it easier for the market to value the business when it is listed on the Stock Exchange. C.To ensure that the venture capitalist receives regular annual returns on its investment. D.To fully adopt IFRS in preparation for listing the company. Answer: B Question No 5: A company is currently all-equity financed. The directors are planning to raise long term debt to finance a new project. The debt:equity ratio after the bond issue would be 30:60 based on estimated market values. According to Modigliani and Miller's Theory of Capital Structure without tax, the company's cost of equity would: A.Stay the same. B.Decrease. C.Increase. D.Increase or decrease depending on the bond's coupon rate. Answer: C

Question No 6: When valuing an unlisted company, a P/E ratio for a similar listed company may be used but adjustments to the P/E ratio may be necessary. Which THREE of the following factors would justify a reduction in the proxy p/e ratio before use? A.The relative lack of marketability of unlisted company shares. B.A lower level of scrutiny and regulation for unlisted companies. C.Unlisted companies being generally smaller and less established. D.Control premium not being included within the proxy p/e ratio used. E.The forecast earnings growth being relatively higher in the unlisted company. F.A profit item within the unlisted company's latest earnings which will not reoccur. Answer: A, B, C Question No 7: A company's Board of Directors wishes to determine a range of values for its equity. The following information is available: Estimated net asset values (total asset less total liabilities including borrowings):  Net book value = $20 million  Net realisable value = $25 million  Free cash flows to equity = $3.5 million each year indefinitely, post-tax.  Cost of equity = 10%  Weighted Average Cost of Capital = 7% Advise the Board on reasonable minimum and maximum values for the equity. A.Minimum value = $25.0 million, and maximum value = $35.0 million B.Minimum value = $25.0 million, and maximum value = $50.0 million C.Minimum value = $20.0 million, and maximum value = $35.0 million D.Minimum value = $20.0 million, and maximum value = $50.0 million Answer: A Question No 8: A consultancy company is dependent for profits and growth on the high value individuals it employs. The company has relatively few tangible assets. Select the most appropriate reason for the net asset valuation method being considered unsuitable for such a company. A.It does not account for the intangible assets. B.It accounts for the intangible assets at historical value. C.It accounts for intangible assets at net realisable value.

D. It does not account for tangible assets. Answer: A Question No 9: 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.A B.B C.C D.D Answer: C Question No 10: A profit-seeking company intends to acquire another company for a variety of reasons, primarily to enhance shareholder wealth. Which THREE of the following offer the greatest potential for enhancing shareholder wealth? A.Achieving more press coverage for the company. B.Creating new opportunities for employees. C.Achieving greater cultural diversity. D.Acquiring Intellectual Property assets. E.Exploiting production synergies. F.Elimination of existing competition. Answer: D, E, F Buy Complete Questions Answers File from 100% Exam Passing Guarantee & Money Back Assurance

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