[Mar 16, 2024] Fully Updated Dumps PDF - Latest CIMAPRA19-F03-1 Exam Questions and Answers
100% Free CIMAPRA19-F03-1 Exam Dumps to Pass Exam Easily from Exam-Killer
CIMA F3 certification exam covers a range of topics, including financial strategy formulation, financial risk management, investment appraisal, and corporate financing. These topics are essential for finance professionals who are involved in strategic decision-making processes and are responsible for ensuring that their organizations have a sound financial strategy.
NEW QUESTION # 185
Company A plans to acquire Company B, an unlisted company which has been in business for 3 years.
It has incurred losses in its first 3 years but is expected to become highly profitable in the near future.
No listed companies in the country operate the same business field as Company B, a unique new high-risk business process.
The future success of the process and hence the future growth rate in earnings and dividends is difficult to determine.
Company A is assessing the validity of using the dividend growth method to value Company B.
Which THREE of the following are weaknesses of using the dividend growth model to value an unlisted company such as Company B?
- A. The cost of capital will be difficult to estimate.
- B. The company has been unprofitable to date and hence, there is no established dividend payment pattern.
- C. The future growth rate in earnings and dividends will be difficult to accurately determine.
- D. The dividend growth model does not take the time value of money into consideration.
- E. The future projected dividend stream is used as the basis for the valuation.
Answer: A,C,E
NEW QUESTION # 186
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 gearing than Company A.
- B. Company B has higher expected future growth than Company A.
- C. Company B has higher business risk than Company A.
- D. Company B has a greater profit this year than Company A.
Answer: B
NEW QUESTION # 187
Which THREE of the following remain unchanged over the life of a 10 year fixed rate bond?
- A. The nominal value
- B. The yield
- C. The amount payable on maturity
- D. The coupon rate
- E. The market value
Answer: A,C,D
NEW QUESTION # 188
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?
- A. There will be no opportunity to participate in the future economic success of Company U.
- B. Interest rates on deposit accounts are currently at a historic low and are expected to remain low.
- C. Cash consideration is certain whereas Company U's future share price performance is uncertain.
- D. Taxation is payable on realised capital gains.
- E. Company U is not expected to change its dividend policy post-acquisition.
Answer: A,B,D
NEW QUESTION # 189
A company wishes to raise new finance using a rights issue. The following data applies:
* There are 10 million shares in issue with a market value of $4 each
* The terms of the rights will be 1 new share for 4 existing shares held
* After the rights issue, the theoretical ex-rights price (TERP) will be $3.80 Assuming all shareholders take up their rights, how much new finance will be raised ?
Give your answer to one decimal place.
Answer:
Explanation:
$ ? million
7.5, 7.50
NEW QUESTION # 190
SUP is a large supermarket chain. It produces many 'own brand' goods in Country S where the parent company is located. These goods are sold in SUP's supermarkets in Country S as well as being sold at a 'transfer price' to SUP companies located in foreign countries for sale in the SUP supermarkets located in that country.
Which of the following factors is the most important for SUP from a lax planning and compliance viewpoint when setting prices for the 'own brand' goods sold to other group companies'?
- A. The price should be much lower than average if the group company that is purchasing the goods has a higher marginal tax rate than the SUP parent company.
- B. The price should be the same as the price that would be charged by SUP to other, independent, supermarkets that are located in the same foreign country as the group company that requires the goods.
- C. Complying with tax thin capitalisation regulations that apply in both tax jurisdictions.
- D. The price should be higher than for other group companies if the group company that is purchasing the goods has a higher marginal tax rate than the SUP parent company.
Answer: C
NEW QUESTION # 191
DFG is a successful company and its shares are listed on a recognised stock exchange. The company's gearing ratio is currently in line with the industry average and the directors of DFG do not want to increase the company's financial risk. The company does not carry a large cash balance and its shareholders are not expected to be willing to support a rights issue at this time
LMB is a small services company owned and managed by a small board of directors who are going to retire within the next year
DFG wishes to purchase LMB and has approached LMB's owners, who are broadly open to the proposal, to discuss the bid and the consideration to be offered by DFG. LMB's owners explain to DFG that they are also keen to defer any tax liabilities they would be subject to on receipt of the consideration.
Based on the information provided, which of the following types of consideration would be most suitable to finance the acquisition?
- A. DFG shares for a percentage of the current value of LMB plus a three year earn-out arrangement
- B. Cash for the current value of LMB
- C. DFG shares for the current value of LMB
- D. Loan stock in DFG for the current value of LMB
Answer: C
NEW QUESTION # 192
Company WWW is identical in all operating and risk characteristics to Company ZZZ. but their capital structures differ. Company WWW and Company ZZZ both pay corporate income tax at 20% Company WWW has a gearing ratio (debt: equity) of 1:3 Its pre-tax cost of debt is 6%.
Company ZZZ Is all-equity financed. Its cost of equity is 15%
What is the cost of equity tor Company WWW?
- A. 17.0%
- B. 17.7%
- C. 17.4%
- D. 18.0%
Answer: A
NEW QUESTION # 193
Which THREE of the following statements are correct in respect of the issuance of debt securities.
- A. A corporate entity coming to the bond market for the first time will find it easier to issue corporate bonds than to arrange a conventional term loan.
- B. A bond issuer must appoint at least one market-maker to ensure that there is a liquid market in its traded bonds.
- C. Governments are the most frequent issuers of bonds and the proceeds are used to fund government expenditure or service the national debt.
- D. The redemption yield on a corporate bond can be determined by calculating the internal rate of return based on the cash flows arising during the duration of the bond.
- E. Investors in traded bonds have an ownership (or equity stake) in the company which issued the bonds.
Answer: A,C,E
NEW QUESTION # 194
Which three of the following are most likely be primary objectives for a newly established, unincorporated entity in the service sector?
- A. Providing consistently high levels service quality
- B. Reaching an optimum capital structure
- C. Maintaining sufficient liquidity in the business to avoid overtrading
- D. Increasing Revenue
- E. Increasing the dividend payment year on year
Answer: B,C,D
NEW QUESTION # 195
An entity prepares financial statements to 31 December each year. The following data applies:
1 December 20X0
* The entity purchased some inventory for $400,000.
* In order to protect the inventory against adverse changes in fair value the entity entered into a futures contract to sell the inventory for a fixed price on 31 January 20X1.
* The entity designated this contract as a fair value hedge of the value of the inventory.
31 December 20X0
* The inventory had a fair value of $480,000 and the futures contract had a fair value of $75,000 (a financial liability).
What will be the impact on the statement of profit or loss and other comprehensive income for the year ended
31 December 20X0 in respect of the change in the value of the inventory and the futures contract?
- A. A net gain of $5,000 will be recognised in profit or loss.
- B. A loss of $75,000 will be recognised in other comprehensive income.
- C. A loss of $75,000 will be recognised in profit or loss.
- D. A net gain of $5,000 will be recognised in other comprehensive income.
Answer: A
NEW QUESTION # 196
TU has relatively few tangible assets and is dependent for profits and growth on the high-value individuals it employs. Which of the following statements best explains why the net asset valuator method's considered unstable for TU?
- A. TU does not account for its tangible assets
- B. TU accounts for its intangible assets at net realisable value.
- C. TU does not account for its intangible assets.
- D. TU accounts for its intangible assets at historical value.
Answer: C
NEW QUESTION # 197
Company M plans to bid for Company J. Company M has 20 million shares in issue and a current share price of $10.00 before publicly announcing the planned takeover. Company J has 10 million shares in issue and a current share price of $4.00.
The directors of Company M are considering an all-share bid of 1 Company M shares for 2 Company J shares.
Synergies worth $20m are expected from the acquisition.
What is the likely change in wealth for Company M's shareholders (in total) if the bid is accepted?
Give your answer to the nearest $ million.
$ ? million
Answer:
Explanation:
8
NEW QUESTION # 198
RR has agreed to sell goods to XX for S20.000 XX will pay when the goods are delivered in 6 months time.
RR's home currency is the £- The current exchange rate is 4.3 £/S. The projected inflation rate for the S is
2.8%, and for the E 4 6%.
When RR receives payment for its goods, what will the value be to the nearest pound?
- A. £85,243
- B. £86 760
- C. £87.506
- D. £84.520
Answer: C
NEW QUESTION # 199
Hospital X provides free healthcare to all members of the community, funded by the central Government.
Hospital Y provides healthcare which has to be paid for by the individual patients. It is a listed company, owned by a large number of shareholders.
In comparing the above two organisations and their objectives, which THREE of the following statements are correct?
- A. X is a not-for-profit organisation while Y is a for-profit organisation.
- B. The performance of X will be appraised primarily on the basis of value for money.
- C. Only Y is likely to have a mixture of financial and non-financial objectives.
- D. X and Y will have the same primary non financial objective - provision of quality of health care.
- E. X and Y have the same primary financial objective - to maximise shareholder wealth.
Answer: A,B,D
NEW QUESTION # 200
......
Free CIMAPRA19-F03-1 Exam Questions CIMAPRA19-F03-1 Actual Free Exam Questions: https://www.exam-killer.com/CIMAPRA19-F03-1-valid-questions.html
Verified CIMAPRA19-F03-1 dumps and 435 unique questions: https://drive.google.com/open?id=1I03WZDAhW0MCQGVixTdDqLgtbg7e8Qr6
