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CIMA Updated F3 Exam Questions and Answers by iga

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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: iga
Question 96

Company U has made a bid for the entire share capital of Company B.

Company U is offering the shareholders in Company B the option of either a share exchange or a cash alternative.

 

Advise the shareholders in Company B which THREE of the following would be considered disadvantages of accepting the cash consideration?

Options:

A.

Cash consideration is certain whereas Company U's future share price performance is uncertain.

B.

Interest rates on deposit accounts are currently at a historic low and are expected to remain low.

C.

Company U is not expected to change its dividend policy post-acquisition.

D.

Taxation is payable on realised capital gains.

E.

There will be no opportunity to participate in the future economic success of Company U.

Discussion
Question 97

On 1 January:

• Company ABB has a value of $55 million

• Company BBA has a value of $25 million

• Both companies are wholly equity financed

Company ABB plans to take over Company BBA by means of a share exchange Following the acquisition the post-tax cashflow of Company ABB for the foreseeable future is estimated to be $10 million each year The post-acquisition cost of equity is expected to be 10%

What is the best estimate of the value of the synergy that would arise from the acquisition?

Options:

A.

$125 million

B.

$30 million

C.

$75 million

D.

$20 million

Discussion
Question 98

Company A is based in country A with the AS as its functional currency. It expects to receive BS20 million from Company B in settlement of an export invoice.

The current exchange rate is A$1 =B$2 and the daily standard deviation of this exchange rate = 0 5%

What is the one-day 95% VaR in AS?

Options:

A.

A$50,000

B.

A$164,500

C.

A$82,250

D.

A$822,500

Discussion
Question 99

Company P is a pharmaceutical company listed on an alternative investment market.  

The company is developing a new drug which it hopes to market in approximately six years' time.

Company P is owned and managed by a group of doctors who wish to retain control of the company.  The company operates from leased laboratories with minimal fixed assets. 

Its value comes from the quality of its research staff and their research.

The company currently has one approved drug which generates sufficient cashflow to cover day to day operations but not sufficient for major new research and development.

Company P wish to raise debt finance to develop the new drug. 

 

Recommend which of the following types of debt finance would be most appropriate for Company P to help finance the development of this new drug. 

Options:

A.

6% Eurobond repayable at par in 5 years' time.

B.

5% Bond repayable at par in 7 years' time.

C.

3% Commercial Paper.

D.

4% Convertible bond with a conversion ratio of 350 ordinary shares per bond.

Discussion
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