Unique Top-selling CIMAPRA19-F03-1 Exams - New 2024 CIMA Pratice Exam
CIMA Strategic level Dumps CIMAPRA19-F03-1 Exam for Full Questions - Exam Study Guide
Candidates who pass the CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) Certification Exam are able to demonstrate their ability to analyze financial information, develop strategies for financial decision-making, and manage financial risks. These skills are highly valued in the business world, and the certification can open up a range of career opportunities. CIMAPRA19-F03-1 exam is computer-based and consists of objective test questions. Candidates have three hours to complete the exam and must achieve a minimum of 70% to pass.
CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) Exam is a comprehensive assessment that tests candidates on their proficiency in financial strategy development and implementation. CIMAPRA19-F03-1 exam is a part of the CIMA Professional Qualification and is designed to equip candidates with the skills and knowledge necessary to make strategic financial decisions that align with the overall business objectives of an organization.
The F3 Financial Strategy exam is ideal for finance professionals who are looking to expand their knowledge and skills in the field of financial management. CIMAPRA19-F03-1 exam is particularly beneficial for those who are looking to advance their careers in corporate finance, investment banking, or financial analysis. The F3 Financial Strategy exam is also suitable for those who want to enhance their knowledge and skills in financial management to improve their job performance.
NEW QUESTION # 131
A private company was formed five years ago and is currently owned and managed by its five founders. The founders, who each own the same number of shares have generally co-operated effectively but there have also been a number of areas where they have disagreed
The company has grown significantly over this period by re-investing its earnings into new investments which have produced excellent returns
The founders are now considering an Initial Public Offering by listing 70% of the shares on the local stock exchange
Which THREE of the following statements about the advantages of a listing are valid?
- A. Helps access to wider sources of finance.
- B. Provides an exit route for the founders
- C. Reduces agency conflict
- D. Increases dividend payouts
- E. Increases the profile and reputation of the business.
Answer: A,B,E
NEW QUESTION # 132
A company has 8% convertible bonds in issue. The bonds are convertible in 3 years time at a ratio of 20 ordinary shares per $100 nominal value bond.
Each share:
* has a current market value of $5.60
* is expected to grow at 5% each year
What is the expected conversion value of each $100 nominal value bond in 3 years' time?
- A. $129.6
- B. $117.6
- C. $112.0
- D. $100.0
Answer: A
NEW QUESTION # 133
Two unlisted companies TTT and YYY are being valued. The companies have similar capital structures and risk profiles and operate in the same industry sector It is easier to value TTT than to value YYY because there have recently been several well-publicised private sales of TTT shares.
Relevant company data:
What is the best estimate of YYY's share price?
- A. $0.94
- B. $0.68
- C. $0.60
- D. $1.20
Answer: D
NEW QUESTION # 134
A company's gearing (measured as debt/(debt + equity)) is currently 60% and it is investigating whether an optimal gearing structure exists within the industry.
It has analysed the capital structure of similar companies in the industry and it would appear that there is evidence supporting the traditional theory of capital structure.
Companies with the lowest WACC in the industry have gearing of around 45% to 50%.
Which of the following actions would result in the company achieving a more optimal capital structure?
- A. Increasing the level of dividend to return more cash to shareholders.
- B. Refinancing to replace some of its short term debt with long term debt.
- C. Undertaking a rights issue of equity to repay some of its debt.
- D. Using retained cash to undertake a buyback of some of its equity.
Answer: C
NEW QUESTION # 135
A profitable company wishes to dispose of a loss-making division that generated negative free cashflow in the last financial year.
The division requires significant new investment to return it to profitability.
Which of the following valuation approaches is likely to be the most useful to the company when negotiating the sales price?
- A. Discounted forecast free cashflow
- B. Asset basis
- C. P/E ratio applied to forecast earnings next year
- D. Dividend growth model
Answer: A
NEW QUESTION # 136
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?
- A. 10.0%
- B. 8.0%
- C. 11.0%
- D. 9.4%
Answer: C
NEW QUESTION # 137
Listed Company A has prepared a valuation of an unlisted company. Company B.
to achieve vertical integration Company A is intending to acquire a controlling interest in the equity of Company B and therefore wants to value only the equity of Company B.
The assistant accountant of Company A has prepared the following valuation of Company B's equity using the dividend valuation model (DVM):
Where:
* S2 million is Company B's most recent dividend
* 5% is Company B's average dividend growth rate over the last 5 years
* 10% is a cost of equity calculated using the capital asset pricing model (CAPM), based on the industry average beta factor
Which THREE of the following are valid criticisms of the valuation of Company B's equity prepared by the assistant accountant?
- A. The beta factor used may not reflect Company B's financial risk.
- B. It is better to use the present value of earnings rather than present value of dividends to value a controlling interest
- C. The DVM calculation should use Company A's cost of equity rather than Company B's cost of equity
- D. The 5% growth rate may not reflect the future growth of Company B.
- E. An unlisted company cannot use the capital asset pricing model to calculate its cost of equity
Answer: A,C,D
NEW QUESTION # 138
Which THREE of the following are the most likely exit routes that apply to a venture capitalist?
- A. Flotation via a stock market listing
- B. Trade sale to another company
- C. Selling back to the original owners
- D. Raising long term debt from the company
- E. Liquidation of the company
Answer: A,B,C
NEW QUESTION # 139
Company A has just announced a takeover bid for Company B. The two companies are large companies in the same industry_ The bid is considered to be hostile.
Company B's Board of Directors intends to try to prevent the takeover as they do not consider it to be in the best interests of shareholders
Which THREE of the following are considered to be legitimate post-offer defences?
- A. Publish very optimistic financial forecasts for Company B even though the Board of Directors realises that these are highly unlikely to be achievable
- B. Make a counter bid for Company A provided such an acquisition could enhance Company B's shareholder wealth
- C. Alter the memorandum and articles of association to state that a minimum of 75% of shareholders must agree to the bid before it can proceed
- D. Refer the bid to the competition authorities to try to have the bid prohibited on competition grounds
- E. Have all the assets independently professionally revalued to demonstrate that the offer undervalues the company
Answer: B,C,D
NEW QUESTION # 140
The value of a call option will increase because of:
- A. An increase in the time to expiry.
- B. An increase in the strike price.
- C. A decrease in the volatility of the share.
- D. A decrease in the market value of the share
Answer: D
NEW QUESTION # 141
A listed company is financed by debt and equity.
If it increases the proportion of debt in its capital structure it would be in danger of breaching a debt covenant imposed by one of its lenders.
The following data is relevant:
The company now requires $800 million additional funding for a major expansion programme.
Which of the following is the most appropriate as a source of finance for this expansion programme?
- A. Retained earnings
- B. Private placement of a bond
- C. Bank overdraft
- D. Rights issue
Answer: D
NEW QUESTION # 142
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
Answer:
Explanation:
300, 300000000
NEW QUESTION # 143
On 1 January:
* Company X has a value of $50 million
* Company Y has a value of $20 million
* Both companies are wholly equity financed
Company X plans to take over Company Y by means of a share exchange. Following the acquisition the post-tax cashflow of Company X for the foreseeable future is estimated to be $8 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?
- A. $100 million
- B. $10 million
- C. $30 million
- D. $60 million
Answer: B
NEW QUESTION # 144
A company in country T is considering either exporting its product directly to customers in country P or establishing a manufacturing subsidiary in country P.
The corporate tax rate in country T is 20% and 25% tax depreciation allowances are available
Which TIIRCC of the following would be considered advantages of establishing a subsidiary in country T?
- A. There are restrictions on companies wishing to remit profit from country P
- B. There are high customs cuties payable of products entering country P.
- C. Year 1 tax depreciation allowances of 100% are available in country P.
- D. The corporate tsx rate in country P is 40%.
- E. There is a double tax treaty between country T and country P.
Answer: B,C,E
NEW QUESTION # 145
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?
- A. $111 39 million
- B. $120 14 million
- C. $155.14 million
- D. $146 39 million
Answer: A
NEW QUESTION # 146
A company is located in a single country. The company manufactures electncal goods for export and for sale in its home country. When exporting, it invoices in its customers' currency. What currency risks is the company exposed to?
- A. Transaction, economic and translation risks.
- B. Transaction and economic risks
- C. Transaction risk only
- D. Translation and economic risks.
Answer: A
NEW QUESTION # 147
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