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CIMA Updated F3 Exam Questions and Answers by edgar

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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: edgar
Question 76

A company's current earnings before interest and taxation are $5 million.

These are expected to remain constant for the forseeable future.

The company has 10 million shares in issue which currently trade at $3.60.

It also has a $10 million long term floating rate loan.

The current interest rate on this loan is 5%.

The company pays tax at 20%.

The company expects interest rates to increase next year to 6% and it's Price/Earnings (P/E) ratio to move to 9.5 times by the end of next year.

 

What percentage reduction in the share price will occur by the end of next year if the interest rate increase and the P/E movement both occur?

Options:

A.

Reduction of 7%

B.

Reduction of 5%

C.

Reduction of 1%

D.

Reduction of 0%

Discussion
Question 77

Company WWW is considering making a takeover bid for Company KKA Company KKA's current share price is $5.00

Company WWW is considering either

" A cash payment of $5.75 for each share in Company KKA

" A 5 year corporate bond with a market value of $90 in exchange for 15 shares in Company KKA

Calculate the highest percentage premium which Company KKA shareholders will receive.

Options:

A.

Corporate bond premium = 80%

B.

Corporate bond premium = 20%

C.

Cash premium = 10%

D.

Cash premium = 15%

Discussion
Question 78

Which THREE of the following are considered in detail in IFRS 7 Financial Instruments: Disclosures?

Options:

A.

Credit risk

B.

Business risk

C.

Market risk

D.

Enterprise risk

E.

Liquidity risk

Discussion
Question 79

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

Questions 79

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 2,000 million ordinary shares currently in issue and cancelling them.

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

Options:

A.

$0,050

B.

$0,125

C.

$0,100

D.

$0,075

Discussion
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