Cima dumpspedia last Attempt F3 Questions by Celeste q39 vce pdf

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

Question 32

Company A has made an offer to take over all the shares in Company B on the following terms:

• For every 20 shares currently held, Company B's shareholders will receive $100 bond with a coupon rate of 3%

• The bond will be repaid in 10 years' time at its par value of $100.

• The current yield on 10 year bonds of similar risk is 6%.

What is the effective offer price per share being made to Company B's shareholders?

Options:

$6.43

$4.50

$3.89

$6.89

Discussion

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Question 33

Which TWO of the following statements about debt instruments are correct?

Options:

A zero coupon will eliminate the tax shield effect on debt payments.

Changes in corporation tax rates will have no effect on the tax shield of fixed rate debentures.

The true cost of servicing debt instruments to the company is the post-tax cost of debt.

If corporation tax rates rise, the tax shield effect on debenture interest will be reduced.

Discussion

Question 34

Company A plans to acquire Company B.

Both firms operate as wholesalers in the fashion industry, supplying a wide range of ladies' clothing shops.

Company A sources mainly from the UK, Company B imports most of its supplies from low-income overseas countries.

Significant synergies are expected in management costs and warehousing, and in economies of bulk purchasing.

Which of the following is likely to be the single most important issue facing Company A in post-merger integration?

Options:

Identifying and removing surplus staff.

Understanding the management information system of the acquired firm.

Discussions with representatives from key customer accounts.

Discussions with anti-poverty campaigning groups.

Discussion

Question 35

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?

Options:

4.70%

4.75%

5.25%

4.00%

Discussion

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