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CIMA F3 Financial Strategy https://www.realexamdumps.com/cima/f3-practice-test.html
Overview F3 focuses on the formulation and implementation of financial strategy to support the overall strategy of the organisation. Using insights gained from F1 and F2, it provides the competencies to evaluate the financial requirements of organisations and the relative merits of alternative sources of finance to meet these requirements. Finally the valuation of corporate entities for mergers, acquisitions and divestments.
Objective Test Format: computer based Availability: on demand at any of the 5,000 Pearson VUE centres around the world Length: 90 minutes Marking: computer marked Results: provisional result available immediately followed by confirmation no more than 48 hours later
F3 Financial Strategy A. Financial policy decisions B. Sources of long term funds C. Financial risks D. Business valuation
What do You Learn In F3 Exam? • • The different strategic financial objectives and policy options that are open to organisations. • • The types of funds available to organisations to finance the implementation of their strategies, including where and how they access these funds at the right time, in the right quantities and at the right cost. • • The sources of financial risk, how to evaluate and manage financial risk appropriately, and techniques in business valuation to assess whether a company has created and preserved value within the organisation. • • The valuation techniques to calculate value of organisations and conditions applicable for such calculations especially intangibles in the digital world and how to report intangible value and their drivers in integrated reporting.
CIMA F3 Sample Question 1 A company needs to raise $20 million to finance a project. It has decided on a rights issue at a discount of 20% to its current market share price. There are currently 20 million shares in issue with a nominal value of $1 and a market price of $5 per share. Calculate the terms of the rights issue. A. 1 new share for every 4 existing shares B. 1 new share for every 20 existing shares C. 1 new share for every 5 existing shares D. 1 new share for every 25 existing shares ANSWER : A
CIMA F3 Sample Question 2 A company is based in Country Y whose functional currency is Y$. It has an investment in 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$ 1.25 million B. Y$ 1.00 million C. Y$ 31.25 million D. Y$ 4.00 million ANSWER : A
CIMA F3 Sample Question 3 A company's Board of Directors is assessing the likely impact of financing future new projects using either equity or debt. The directors are uncertain of the effects on key variables. Which THREE of the following statements are true? A. The choice between using either equity or debt will have no impact on the amount of corporate income tax payable. B. Retained earnings has no cost, and is therefore the cheapest form of equity finance. C. Debt finance is always preferable to equity finance. D. Debt finance will increase the cost of equity. E. Equity finance will reduce the overall financial risk. F. Equity finance will increase pressure to pay a higher total future dividend. ANSWER : D, E, F
CIMA F3 Sample Question 4 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 30:60 based on estimated market values. According to Modigliani and Miller's Theory of Capital Structure without tax, the company's cost of equity would: A. stay the same. B. decrease. C. increase. D. increase or decrease depending on the bond's coupon rate. ANSWER : C
CIMA F3 Sample Question 5 Company X is an established, unquoted company which provides IT advisory services. The company's results and cash flows are growing steadily and it has few direct competitors due to the very specialized nature of it's business. Dividends are predictable and paid annually. Company P is looking to buy 30% of company X's equity shares. Which TWO of the following methods are likely to be considered most suitable valuation methods for valuing company P's investment in Company X? A. Asset based using replacement cost B. Dividend based using DVM C. Cash based using free cash flow before interest D. P/E ratio method using IT industry average E. Earnings yield method using a listed IT company as proxy ANSWER : B, C
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