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CIMA Updated F3 Exam Questions and Answers by anabia

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CIMA F3 Exam Overview :

Exam Name: Financial Strategy
Exam Code: F3 Dumps
Vendor: CIMA Certification: CIMA Strategic level
Questions: 435 Q&A's Shared By: anabia
Question 12

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? 

Options:

A.

The swap would be shown at nominal value in the statement of financial position and the change in value posted to other comprehensive income.

B.

The swap would be shown at nominal value in the statement of financial position and the change in value posted to profit or loss.

C.

The swap would be shown at fair value the statement of financial position and the change in value posted to other comprehensive income.

D.

The swap would be shown at fair value the statement of financial position and the change in value posted to profit or loss.

Discussion
Question 13

Extracts from a company's profit forecast for the next financial year as follows:

  Questions 13

Since preparing the forecast, the company has decided to return surplus cash to shareholders by a share repurchase arrangement.

The share repurchase would result in the company purchasing 20% of the 1,250 million ordinary shares currently in issue and canceling them.

 

Assuming the share repurchase went ahead, the impact on the company's forecast earnings per share will be an increase of:

Options:

A.

$0.100

B.

$0.125

C.

$0.175

D.

$0.200

Discussion
Question 14

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.

Options:

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.

Discussion
Question 15

It is now 1 January 20X0.

Company V, a private equity company, is considering the acquisition of 40% of the equity of Company A for a total amount of $15 million.

Company A has been established to develop a new type of engine which will be launched at the end of 20X1. Company A is forecasting that the new engine will result in free cash flows to equity of $2m in its first year of operation and that this will rise by 8% per year for the foreseeable future.

The new engine is the only commercial activity that Company A is involved in.

Company V intends to sell its stake in Company A when the new engine is launched.

Company A has a cost of equity of 12%.

Assuming that Company V receives an amount that reflects the present value of their shares in company A. what is the estimated annual rate of return to Company V from this investment? (To the nearest %)

Options:

A.

3%

B.

10%

C.

16%

D.

33%

Discussion
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