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CIMA Updated F3 Exam Questions and Answers by noor

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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: noor
Question 8

A company has a covenant on its 5% long term corporate bond.

   • Covenant - The earnings must not fall below $7 million

The bond has a nominal value of $60 million.

It is currently trading at 80% of its nominal value.

The projected earnings before interest and taxation for next year are $11.5 million.

The company retains 80% of its earnings. It pays tax at 20%.

 

Advise the Board of Directors which of the following covenant conditions will apply next year?

Options:

A.

The earnings will be = $7.28 million (The covenant will not be breached).

B.

The earnings will be = $11.50 million (The covenant will not be breached).

C.

The earnings will be = $6.80 million (The covenant will be breached).

D.

The earnings will be = $5.44 million (The covenant will be breached).

Discussion
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Question 9

Which of the following is NOT an advantage of a share repurchase?

Options:

A.

To return surplus cash to shareholders by avoiding a one-off dividend

B.

To allow investors to sell shares if no active market currently exists

C.

To reduce the cost of capital of a company by increasing the gearing level.

D.

To enable the company to retain cash in the business for reinvestment

Discussion
Question 10

Company Z has identified four potential acquisition targets: companies A, B, C and D.

Company Z has a current equity market value of $590 million.

The price it would have to pay for the equity of each company is as follows:

Questions 10

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:

Questions 10

Ignoring any premium paid on acquisition, which acquisition should the directors pursue?

Options:

A.

A

B.

B

C.

C

D.

D

Discussion
Question 11

X exports goods to customers in a number of small countries Asia. At present, X invoices customers in X's home currency.

The Sales Director has proposed that X should begin to invoice in the customers currency, and the Treasurers considering the implications of the proposal.

Which TWO of the following statement are correct?

Options:

A.

X may be able to sell the receipts forward.

B.

If the proposal is adopted, X will have a lower effective sales price per unit due to exchange rate fluctuations.

C.

X will know advance the amount of home currency it will receive for the export sales.

D.

The overseas customers may have difficulty obtaining X's name currency with which to make the purchases, so the Sales Director’s proposal may increase sales.

E.

The customer will tear the foreign exchange risk and will only buy from X if they are prepared to accept this.

Discussion
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