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CIMA Updated F3 Exam Questions and Answers by yaqub

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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: yaqub
Question 52

A company’s statement of financial position includes non-current assets which are leased, the tax regime follows the accounting treatment.

Which cash flows should be discounted when evaluating the cost of lease finance?

Options:

A.

Lease payments, implied interested and straight-line accounting deprediation.

B.

Lease payments and straight-line accounting depreciation.

C.

Lease payments and implied interest.

D.

Lease payments, tax relief on implied interest and tax relief on straight-line account depreciation.

Discussion
Question 53

Company A needs to raise AS500 mi lion to invest in a new project and is considering using a pub ic issue of bonds to finance the investment.

Which THREE of the following statements-relating to this bond issue are true?

Options:

A.

A company must be listed before it can issue bones.

B.

The largest issuer of bond i3 the government.

C.

Purchasing bonds in the capital markets enables entities to borrow large amounts of finance.

D.

The bond market is unregulated making it easier to raise finance

E.

Bonds issues in the corporate debt market are underwritten.

Discussion
Question 54

A company is considering the issue of a convertible bond compared to a straight bond issue (non-convertible bond).

Director A is concerned that issuing a convertible bond will upset the shareholders for the following reasons:

   • it will dilute their control

   • the interest payments will be higher therefore reducing liquidity

   • it will increase the gearing ratio therefore increasing financial risk

Director B disagrees, and is preparing a board paper to promote the issue of the convertible bond rather than a non-convertible.

 

Advise the Director B which THREE of the following statements should be included in his board paper to promote the issue of the convertible bond?

Options:

A.

The convertible bond may not dilute control as the bond holder has an option to choose conversion.

B.

The coupon rate on the convertible bond will be lower than that on a non-convertible bond.

C.

When converted into shares, the company will receive a cash inflow which can be used for future investments.

D.

Issuing a convertible bond will have a more favourable impact on the gearing ratio than a non-convertible bond.

E.

Over the life of the bond, a convertible will be more expensive than a non-convertible.

Discussion
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Question 55

A listed company has suffered a period of falling revenues and profit margins. It has been obliged to issue a profit warning to the market and its share price has fallen sharply. The company relies heavily on debt finance and is discussing with its banks possible refinancing options to assist with a restructuring programme.

 

Which THREE of the following are likely to be of MOST interest to the company's banks when they review the refinancing requests?

Options:

A.

Cash flow forecasts

B.

Current capital structure

C.

Trends in share price movements

D.

Shareholder profile

E.

Book value of assets

Discussion
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