This page was exported from Free valid test braindumps [ http://free.validbraindumps.com ] Export date:Thu Apr 17 11:14:54 2025 / +0000 GMT ___________________________________________________ Title: 2022 F3 Question Bank Free PDF Download Recently Updated Questions [Q81-Q101] --------------------------------------------------- 2022 F3 Question Bank: Free PDF Download Recently Updated Questions F3 Certification Exam Dumps with 289 Practice Test Questions Format of the CIMA F3: Financial Strategy Exam Passing score: 70 percentLanguage: EnglishNumber of questions: 60Length of Examination: 90 minutesFormat: Numerous choices, multiple responses   NO.81 A company is considering taking out $10.000,000 of floating rate bank borrowings to finance a new project.The current rate available to the company on floating rate barrowings is 8%. The borrowings contain a covenant based on an interested cover of 5 times.The project is expected to generate the following results:At what interest rate on the floating rate borrowings is the bank covenant first breached?  10.0%  11.0%  8.0%  9.4% NO.82 A is a listed company. Its shares trade on a stock market exhibiting semi-strong form efficiency.Which of the following is most likely to increase the wealth of A’s shareholders?  Announcing that a project will be undertaken generating a positive net present value.  Announcing that the final dividend will remain unchanged from the previous 3 years.  Announcing that a non-current asset will be revalued in the statement of financial position.  Announcing that inventory will be impaired. NO.83 A company is currently all-equity financed.The directors are planning to raise long term debt to finance a new project.The debt:equity ratio after the bond issue would be 40:60 based on estimated market values.According to Modigliani and Miller’s Theory of Capital Structure without tax, the company’s cost of equity would:  stay the same.  decrease.  increase.  increase or decrease depending on the bond’s coupon rate. NO.84 A company wishes to raise new finance using a rights issue to invest in a new project offering an IRR of 10% The following data applies:* There are currently 1 million shares in issue at a current market value of $4 each.* The terms of the rights issue will be $3.50 for 1 new share for 5 existing shares.* The company’s WACC is currently 8%.What is the yield-adjusted theoretical ex-rights price (TERP)?Give your answer to 2 decimal places. $ ?4.06, 4.060NO.85 A manufacturing company is based in Country L whose currency is the L$.One of the company’s products is exported to Country M, a rapidly growing economy, whose currency is the M$.In the most recent financial year:* 100,000 units of the product were sold to customers in country M* The unit selling price was M$12The spot rate today is L$1 = M$5The company has an objective of growth in total sales value in L$ of 10% a year.If the L$ strengthens by 5% next year against the M$, what volume of sales of this product is needed next year to achieve the objective?  115,500 units  104,500 units  105,000 units  110,000 units NO.86 A company s about to announce a new project that has a positive NPV.If the market is semi-strong form efficient, which of the following statements is most Likely to be true?The value of the company will.  only change to incorporate historical information.  Increase by the NPV of the project once the information has been announced  already include the value of the project.  increase only on completion of the project. NO.87 Company A plans to acquire Company B in a 1-for-1 share exchange.Pre-acquisition information is as follows:Post-acquisition information is as follows:* Annual earnings are expected to increase by $4 million.* The P/E multiple of the combined company is expected to be 12 times.If the acquisition proceeds, what is the expected percentage increase in the post acquisition share price of Company A?  50%  8%  6%  0% NO.88 A new company was set up two years ago using the personal financial resources of the founders.These funds were used to acquire suitable premises.The company has entered into a long-term lease on the premises which are not yet fully fitted out.The founders are considering requesting loan finance from the company’s bank to fund the purchase of custom-made advanced technology equipment.No other companies are using this type of equipment.The company expects to continue to be profitable for the forseeable future.It re-invests some of its surplus cash in on-going essential research and development.Which THREE of the following features are likely to be considered negatives by the bank when assessing the company’s credit-worthiness?  The equipment is advanced technology custom-made equipment.  The company will continue to remain profitable and to generate net cash.  The company premises are on a long-term lease but are not yet fully fitted out.  The founders invested their personal financial resources in the company.  Essential on-going research and development expenditure is required. NO.89 A company has:* A price/earnings (P/E) ratio of 10.* Earnings of $10 million.* A market equity value of $100 million.The directors forecast that the company’s P/E ratio will fall to 8 and earnings fall to $9 million.Which of the following calculations gives the best estimate of new company equity value in $ million following such a change?A)B)C)D)  Option A  Option B  Option C  Option D NO.90 AA is considering changing its capital structure. The following information is currently relevant to AA:The gearing rating raising the new debt finance will be 50%.Which THREE of the following statement about the impact of AA’s change in capital structure are true under Modigliani and Miler’s capital structure theory with tax.  The cost of debt will increase above 4%  The WACC will decrease below 7.6%  The cost of equity will increase above 10%  The cost of equity will decrease below 10%  The WACC increase above 7.6  The cost of debt remain unchanged at 4% NO.91 Company C invests heavily in Research and Development an need to raise $45 million to finance future projects. It has decided to use equity finance raised by a tender offer, The following tender offers have been received from potential investors:Company C wishes to select an offer price that will project shareholders from a significant dilution of control but still raise the required amount of finance.What offer price should Company C’s select?  $4.50  $4.00  $4.75  $4.25 NO.92 A company is planning to repurchase some of its shares. Relevant details are as follows:* 100 million shares in issue* Current share price $5* 5 million shares to be repurchased* 10% repurchase premium* Repurchased shares to be cancelledWhat would you expect the share price after the repurchase to be?Give your answer to two decimal places. $ ?4.97, 4.98NO.93 An unlisted company operates in a niche market, exploring the west coast of Africa for new oiI reservoirs.The oil exploration program has been successful in recent years and t now has a substantial amount of oil reserves with a high level of certainty of being recoverable Under financial reporting regulations, oil still in the ground is not recognised as an asset unit is extracted.The expense of the exploration program has used up all the company’s available cash resources.The company has denied to list or a stock market and raise finds through an initial public offering to finance its drilling program.Which of the following valuation methods in the appropriate to use in calculating an initial listing price for this company?  Market capitalisation.  Framings valuation using the ratio of a multinational oil exploration company  Net asset valuation based on book values.  Discounted cash flow valuation NO.94 A listed entertainment and media company produces and distributes films globally. The company invests heavily in intellectual property in order to create the scope for future film projects. The company has five separate distribution companies, each managed as a separate business unit The company is seeking to sell one of its business units in a management buy-out (MBO) to enable it to raise finance for proposed new investments The business unit managers have been in discussions with a bank and venture capitalists regarding the financing for the MBO The venture capitalists are only prepared to invest a mixture of debt and equity and have suggested the following:The venture capitalists have stated that they expect a minimum return on their equity investment of 30% a year on a compound basis over the first 5 years of the MBO No dividends will be paid during this period.Advise the MBO team of the total amount due to the venture capitalist over the 5-year period to satisfy their total minimum return?  $155.14 million  $111 39 million  $120 14 million  $146 39 million NO.95 A company has convertible bonds in issue.The following debt is apply (31 December 20X0):* Conversion ratio- 20 shares for each $130 bond.* Current share price – $4 50* Expected annual growth in share price – 5%Advise the bond Holder at which date the convers on would be worthwhile?  31 December 20X2  31 December 20X0  31 December 20X3  31 December 20X1 NO.96 Company A is proposing a rights issue to finance a new investment. Its current debt to equity ratio is10%.Which TWO of the following statements are true?  The issue price has to be at least 20% below the pre-rights share price.  The issue price of new shares should be set to guarantee the full take up of shares offered.  The actual ex-rights price may be higher than the theoretical ex-rights price due to the value created from the project.  Company A’s current low gearing ratio may require a rights issue rather than a debt issue to finance the new project.  According to Modigliani and Miller’s Theory of Capital Structure with tax, the rights issue will result in a lower cost of equity for Company A. NO.97 A listed company has recently announced a profit warning.The company’s share price fell 20% on the day of the announcement but had been fairly static in the weeks leading up to the announcement.Which form of efficient market is most likely to be indicated by this share price movement?  Weak form  Semi-strong form  Strong form  Random walk NO.98 A company is valuing its equity prior to an initial public offering (IPO).Relevant data:* Earnings per share $1.00* WACC is 8% and the cost of equity is 12%* Dividend payout ratio 40%* Dividend growth rate 2% in perpetuityThe current share price using the Dividend Valuation Model is closest to:  $4.08  $6.12  $6.80  $4.00 NO.99 A company’s gearing is well below its optimal level and therefore it is considering implementing a share re-purchase programme.This programme will be funded from the proceeds of a planned new long-term bond issue.Its financial projections show no change to next year’s expected earnings.As a result, the company plans to pay the same total dividend in future years.If the share re-purchase is implemented, which THREE of the following measures are most likely to decrease?  The Weighted Average Cost of Capital  The cost of equity  The interest cover  Next year’s dividend per share  The gearing, based on book value (debt / (debt + equity))  The number of shares in issue NO.100 The directors of a financial services company need to calculate a valuation of their company’s equity in preparation for an upcoming initial Public Offering (IPO) of shares. At a recent board meeting they discussed the various methods of business valuation.The Chief Executive suggested using a Price-earing (P./E) method of valuation, but the finance Director argued that a valuation based on forecast cash flows to equity would be more appropriate.Which THREE of the following are advantages of valuation based on forecast cash flows to equity, compared to a valuating using a price earnings methods?  Using cash is theoretically superior to using profits in a valuation calculation.  It give on estimate of the likely shareholder value that will be created.  The calculations are much simpler.  It incorporates the time value of money.  It avoids the problem of having to forecast a sustainable level of future growth. NO.101 A company is considering taking out $10.000,000 of floating rate bank borrowings to finance a new project.The current rate available to the company on floating rate barrowings is 8%. The borrowings contain a covenant based on an interested cover of 5 times.The project is expected to generate the following results:At what interest rate on the floating rate borrowings is the bank covenant first breached?  10.0%  11.0%  8.0%  9.4%  Loading … Benefits of the CIMA F3: Financial Strategy Exam When it comes to the CIMA Professional Qualification, there are levels for everything from operations to management to strategy. Each of these levels is built on three pillars of domain knowledge: Enterprise, Performance, and Financial. A candidate's competence to perform job tasks to the highest standards in the workplace is shown bypassing each level of the qualification. Providing an evidence of managerial competence across the Enterprise, Performance, and Financial dimensions of the qualification. It helps to set standards to recognize individuals who are qualified for promotion or deployment for increased responsibility. 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