[Oct 17, 2022] Get New CIMAPRA19-F03-1 Certification Practice Test Questions Exam Dumps
Real CIMAPRA19-F03-1 Exam Dumps Questions Valid CIMAPRA19-F03-1 Dumps PDF
Cost of the CIMA F3: Financial Strategy Exam
The cost of the CIMA F3: Financial Strategy Exam is 300 US Dollars.
Format of the CIMA F3: Financial Strategy Exam
- Format: Numerous choices, multiple responses
- Number of questions: 60
- Length of Examination: 90 minutes
- Language: English
- Passing score: 70 percent
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NEW QUESTION 201
The primary objective of a public sector entity is to ensure value for money is generated.
Value for money is defined as performing an activity so as to simultaneously achieve economy, efficiency and effectiveness Efficiency is defined as:
- A. spending funds so as to achieve the objectives of the entity.
- B. performing activities in the least amount of time possible
- C. obtaining quality inputs at minimum cost.
- D. obtaining maximum output from minimum inputs
Answer: B
NEW QUESTION 202
Two companies that operate in the same industry have different Price/Earnings (P/E) ratios as follows:
Which of the following is the most likely explanation of the different P/E ratios?
- A. Company B has higher business risk than Company A.
- B. Company B has higher expected future growth than Company A.
- C. Company B has higher gearing than Company A.
- D. Company B has a greater profit this year than Company A.
Answer: B
NEW QUESTION 203
Companies L. M N and O:
* are based in a country that uses the RS as its currency
* have an objective to grow operating profit year on year
* have the same total levels of revenue and cost
* trade with companies or individuals in the United States. All import and export trade with companies or individuals in the United States is priced in US$.
Typical import/export trade for each company in a year are as follows:
Which company's growth objective is most sensitive to a movement in the USS / RS exchange rate?
- A. Company N
- B. Company O
- C. Company M
- D. Company L
Answer: D
NEW QUESTION 204
An all equity financed company plans an issue of new ordinary shares to the general public to raise finance for a new project
The following data applies:
* 10 million ordinary shares are currently in issue with a market value of S3 each share
* The new project will cost S2.88 million and is expected to give a positive NPV of S1 million
* The issue will be priced at a AaA discount to the current share price.
What gam or loss per share will accrue to the existing shareholders?
- A. Gain of 0.18
- B. Loss of $0.08
- C. Loss of $0.18
- D. Gain of $0.08
Answer: D
NEW QUESTION 205
A listed company is planning to raise $21.6 million to finance a new project with a positive net present value of $5 million. The finance is to be raised via a rights issue at a 10% discount to the current share price. There are currently 100 million shares in issue, trading at $2.00 each.
Taking the new project into account, what would the theoretical ex-rights price be?
Give your answer to two decimal places.
$ ?
- A. 2.02, 1.03
- B. 2.02, 2.03
Answer: B
NEW QUESTION 206
A company is planning to issue a 5 year $100 million bond at a fixed rate of 6%.
It is also considering whether or not to enter into a 10 year $100 million swap to receive 5% fixed and pay Libor + 1% once a year.
The company predicts that Libor will be 4% over the life of the 5 years.
What is the impact of the swap on the company's annual interest cost assuming that the Libor prediction is correct?
- A. Increase by 1%.
- B. Fall by 2%.
- C. Remain the same.
- D. Fall by 1%.
Answer: C
NEW QUESTION 207
A company plans to cut its dividend but is concerned that the share price will fall. This demonstrates the _____________ effect
- A. B
- B. A
Answer: B
NEW QUESTION 208
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 cancelled
What would you expect the share price after the repurchase to be?
Give your answer to two decimal places.
$ ?
Answer:
Explanation:
4.97, 4.98
NEW QUESTION 209
A company is considering either directly exporting its product to customers in a foreign country or setting up a subsidiary in the foreign country to manufacture and supply customers in that country.
Details of each alternative method of supplying the foreign market are as follows:
There is an import tax on product entering the foreign country of 10% of sales value.
This import duty is a tax-allowable deduction in the company's domestic country.
The exchange rate is A$1.00 = B$1.10
Which alternative yields the highest total profit after taxation?
- A. Foreign subsidiary: A$38,500
- B. Foreign subsidiary: A$35,000
- C. Domestic: A$41,250
- D. Domestic: A$33,750
Answer: B
NEW QUESTION 210
A company's latest accounts show profit after tax of $20.0 million, after deducting interest of $5.0 million. The company expects earnings to grow at 5% per annum indefinitely.
The company has estimated its cost of equity at 12%, which is included in the company WACC of 10%.
Assuming that profit after tax is equivalent to cash flows, what is the value of the equity capital?
Give your answer to the nearest $ million.
$ ? million
- A. 100, 300000000
- B. 300, 300000000
Answer: B
NEW QUESTION 211
A company aims to increase profit before interest and tax (PBIT) each year.
The company reports in A$ but has significant export sales priced in B$.
All other transactions are priced in A$.
In 20X1, the company reported:
In 20X2, the only changes expected are:
* An increase in export prices of 10%, but no change to units sold.
* A rise in the value of the B$ to A$/B$ 2.500 (that is, A$ 1 = B$ 2.5) Is it likely that the company would still meet its objective to grow PBIT between 20X1 and 20X2?
- A. Yes, PBIT would increase by A$ 150 million.
- B. Yes, PBIT would increase by A$ 48 million.
- C. No, PBIT would fall by A$ 150 million.
- D. No, PBIT would fall by A$ 48 million.
Answer: D
NEW QUESTION 212
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?
- A. Discounted cash flow valuation
- B. Net asset valuation based on book values.
- C. Framings valuation using the ratio of a multinational oil exploration company
- D. Market capitalisation.
Answer: A
NEW QUESTION 213
XYZ is a multi-national group with subsidiary AA in Country A and subsidiary BB in Country B. The capital structures of AA and BB are set up to take advantage of the lower tax rate in Country A Thin capitalisation rules in Country B will limit the ability for either AA or BB to claim tax relief on:
- A. interest earned by AA
- B. interest earned by BB.
- C. interest paid by BB
- D. interest paid by AA
Answer: C
NEW QUESTION 214
A company is based in Country Y whose functional currency is Y$. It has an investment in Country Z whose functional currency is Z$.
This year the company expects to generate Z$ 10 million profit after tax.
Tax Regime:
* Corporate income tax rate in country Y is 50%
* Corporate income tax rate in country Z is 20%
* Full double tax relief is available
Assume an exchange rate of Y$ 1 = Z$ 5.
What is the expected profit after tax in Y$ if the Z$ profit is remitted to Country Y?
- A. Y$ 1.00 million
- B. Y$ 31.25 million
- C. Y$ 4.00 million
- D. Y$ 1.25 million
Answer: D
NEW QUESTION 215
Company C has received an unwelcome takeover bid from Company P.
Company P is approximately twice the size of Company C based on market capitalisation.
Although the two companies have some common business interests, the main aim of the bid is diversification for Company P.
The offer from Company P is a share exchange of 2 shares in Company P for 3 shares in Company C.
There is a cash alternative of $5.50 for each Company C share.
Company C has substantial cash balances which the directors were planning to use to fund an acquisition.
These plans have not been announced to the market.
The following share price information is relevant. All prices are in $.
Which of the following would be the most appropriate action by Company C's directors following receipt of this hostile bid?
- A. Refer the bid to the country's competition authorities.
- B. Write to shareholders explaining fully why the company's share price is under valued.
- C. Change the Articles of Association to increase the percentage of shareholder votes required to approve a takeover.
- D. Pay a one-off special dividend.
Answer: B
NEW QUESTION 216
A product costs USD10 when purchased in the USA. The same product costs USD12 when it is purchased in the UK and the price in GBP is convened to USD.
Which of the following statement concerning purchasing power parity is correct?
- A. Economic forces will bring the prices in the USA and UK into line.
- B. This type of price deferential is a reliable baas for predicting currency movements
- C. Economic forces should eliminate the price difference. but there could be market imperfections that permit it to persist.
- D. The exchange rate between the USD and GBP will change so that tie price differential on this product (and at other products) is eliminated.
Answer: C
NEW QUESTION 217
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