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CIMA F3 - Financial Strategy exam in just 24
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Sample Questions - CimaDumps.us

• Question 1
• Which THREE of the following remain
  unchanged over the life of a 10 year fixed rate
  bond?
• A. The coupon rate
• B. The yield
• C. The market value
• D. The nominal value
• E. The amount payable on maturity
• Answer A, D, E

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• Question 2
• Companies A, B, C and D
• Are based in a country that uses the K 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 euro
  zone. All import and export trade with companies
  or individuals in the euro zone is priced in EUR.
  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
  EUR/K exchange rate?
• A.Company A
• B.Company B
• C.Company C
• D.Company D
• Answer B

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• Question 3
• A company currently has a 6.25 fixed rate
  loan but it wishes to change the interest style
  of the loan to variable by using an interest rate
  swap directly with the bank. The bank has quoted
  the following swap rate
• 5.50
• - 5.55 in exchange for LIBOR LIBOR is
  currently 5. If the company enters into the swap
  and LIBOR remains at 5, what will the company's
  interest cost be?
• A.  5.00
• B. 5.75
• C.5.70
• D.  6.25
• Answer B

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• Question 4
• A private company manufactures goods
  for export, the goods are priced in foreign
  currencyB. The company is partly owned by
  members of the founding family and partly by a
  venture capitalist who is helping to grow the
  business rapidly in preparation for a planned
  listing in three years' time. The company
  therefore has significant long term exposure to
  the B. This exposure is hedged up to 24 months
  into the future based on highly probable forecast
  future revenue streams. The company does not
  apply hedge accounting and this has led to high
  volatility in reported earnings. Which of the
  following best explains why external consultant
  shave recently advised the company to apply hedge
  accounting?
• A. To provide a more appropriate earnings figure
  for use in calculating the annual dividend.
• B. To make it easier for the market to value
  the business when it is listed on the Stock
  Exchange.
• C. To ensure that the venture capitalist receives
  regular annual returns on its investment.
• D. To fully adopt IFRS in preparation for listing
  the company.
• Answer B

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• Question 5
• 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 3060 based on
  estimated market values. According to Modigliani
  and Miller's Theory of Capital Structure without
  tax, the company's cost of equity would
• A. Stay the same.
• B. Decrease.
• C. Increase.
• D. Increase or decrease depending on the bond's
  coupon rate.
• Answer C

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• Question 6
• When valuing an unlisted company, a P/E
  ratio for a similar listed company may be used
  but adjustments to the P/E ratio may
  be necessary. Which THREE of the following
  factors would justify a reduction in the proxy
  p/e ratio before use?
• A. The relative lack of marketability of unlisted
  company shares.
• B. A lower level of scrutiny and regulation for
  unlisted companies.
• C. Unlisted companies being generally smaller and
  less established.
• D. Control premium not being included within the
  proxy p/e ratio used.
• E. The forecast earnings growth being relatively
  higher in the unlisted company.
• F. A profit item within the unlisted company's
  latest earnings which will not reoccur.
• Answer A, B, C

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