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CIMA Updated F3 Exam Questions and Answers by elsie-rose

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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: elsie-rose
Question 84

Company ADE is an unlisted company; it needs to raise a significant amount of finance to fund future expansion. The directors are considering listing the company on the local stock exchange The following discussions have taken place between some of the directors:

Director A - We consider a public issue of bonds in the capital markets, we don't need to list to issue the bonds which will save time and money.

Director B - We should list on the Alternative Investment Market (AIM) and not the main market to avoid any regulatory requirements

Director C - We should remain unlisted; we can access an unlimited amount of equity finance through a rights issue

Director D - Listing will increase Company ADE's ability to raise new equity and debt finance in the future.

Director E - If we list, Company ADE will be a more likely target for a takeover than if we remain unlisted.

Which TWO of the directors' statements are correct?

Options:

A.

Director A

B.

Director B

C.

Director C

D.

Director D

E.

Director E

Discussion
Question 85

A company has in a 5% corporate bond in issue on which there are two loan covenants.

   • Interest cover must not fall below 3 times

   • Retained earnings for the year must not fall below $3.5 million

The Company has 200 million shares in issue.

The most recent dividend per share was $0.04.

The Company intends increasing dividends by 10% next year.

 

Financial projections for next year are as follows:

 Questions 85

Advise the Board of Directors which of the following will be the status of compliance with the loan covenants next year?

Options:

A.

The company will be in compliance with both covenants.

B.

The company will be in breach of both covenants.

C.

The company will breach the covenant in respect of retained earnings only.

D.

The company will be in breach of the covenant in respect of interest cover only.

Discussion
Question 86

A company's Board of Directors is assessing the likely impact of financing future new projects using either equity or debt.

The directors are uncertain of the effects on key variables.

 

Which THREE of the following statements are true?

Options:

A.

The choice between using either equity or debt will have no impact on the amount of corporate income tax payable.

B.

Retained earnings has no cost, and is therefore the cheapest form of equity finance.

C.

Debt finance is always preferable to equity finance.

D.

Debt finance will increase the cost of equity.

E.

Equity finance will reduce the overall financial risk.

F.

Equity finance will increase pressure to pay a higher total future dividend.

Discussion
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Question 87

An unlisted company has the following data:

Questions 87

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:

Questions 87

Give your answer to the nearest whole number.

Options:

Discussion
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