[Apr 29, 2026] Free CIMA Strategic level CIMAPRA19-F03-1 Exam Question
CIMAPRA19-F03-1 dumps & CIMA Strategic level sure practice dumps
CIMA F3 exam covers a wide range of topics, including financial analysis and planning, financial reporting, risk management, cost management, and investment appraisal. Candidates are expected to have a good understanding of accounting principles and financial reporting standards, as well as analytical and problem-solving skills. CIMAPRA19-F03-1 exam is divided into two sections, with each section lasting three hours. The first section is objective test questions, while the second section is a case study-based exam.
CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) Certification Exam is intended for professionals who are looking to enhance their knowledge of financial strategy and advance their careers in the financial industry. CIMAPRA19-F03-1 exam covers a wide range of topics related to financial strategy, including financial analysis, risk management, investment planning and management, and financial reporting. CIMAPRA19-F03-1 exam is designed to test the candidate's knowledge of these topics and their ability to apply this knowledge to real-world financial situations.
NEW QUESTION # 246
A company plans to cut its dividend but is concerned that the share price will fall. This demonstrates the
_____________ effect
Answer:
Explanation:
clientele
NEW QUESTION # 247
KKL is a listed sports clothing company with three separate business units. KKL is seeking to sell TT', one of these business units TTP cwns a new. brand of trail running shoes that have Droved hugely popular with lone distance runners.
The management team of TTP are frustrated by the constraints imposes b/ KKL in managing tie brand and developing. the bus ness and they believe that TTF has huge growth potential.
The management team of TTP have approached KKL with a proposal to purchase 1~P through a management layout (MDO). KKL has accepted this proposal as TTP has not proved to be a good fit' with the rest of the business and has agreed on the selling price.
Which THREE of the following factors a-e mast Likely to affect the success of the MBO?
- A. Searing sufficient. funding for the MBO.
- B. The ability the TTP management team to develop the brand and achieve the expected growth.
- C. The constraints imposed by KKL managing TTF's brand.
- D. The ability of the TTF management team to take over the head office functions successfully.
- E. The motivation of the TTP management team to invest in future growth.
Answer: A,B,D
Explanation:
B - Securing sufficient funding for the MBO
C - The ability of the TTP management team to take over the head office functions successfully D - The ability of the TTP management team to develop the brand and achieve the expected growth (Constraints imposed by KKL will disappear after the buy-out, and motivation is already clearly present, so the key determinants of success are funding and the team's capability to run and grow the business independently.)
NEW QUESTION # 248
Company C is a listed company. It is currently considering the acquisition of Company D. The original founder of Company C currently owns 52% of the shares.
Alternative forms of consideration for Company D being considered are as follows:
* Cash payment, financed by new borrowing
* issue of new shares in Company C
Which of the following is an advantage of a cash offer over a share-for exchange from the viewpoint of the original founder of Company C?
- A. A share-for-share exchange would require the approval shareholders in Company C but a cash offer would not.
- B. A share-for-share exchange would require the approval of the Competition Authorities but a cash offer would not.
- C. A share for share exchange would result in a significant change in control of Company C whereas a cash offer would not.
- D. A cash offer would result in a lower gearing ratio therefore reduce the weighted overage cost of capital whereas a cash offer would not.
Answer: C
Explanation:
Founder of Company C owns 52% and wants to keep control.
A share-for-share exchange means issuing new shares # dilutes the founder's holding and may reduce control.
A cash offer financed by borrowing does not issue new shares # founder's percentage holding (and control) is preserved.
That is exactly what option A states.
NEW QUESTION # 249
Company A is subject to a takeover bid from Company B, both companies operate in the same industry and each of them demand a significant market share Company B h3S made an of an of $5 per share to the shareholders of Company A.
The directors of Company A do not believe the takeover would be h the best interests of the stakeholders and other stakeholders of Company A due to the following reruns
1. Company B has recently taken ever several ether companies resulting in them breaking up the company and se ling on the assets.
2 The directors of Company A believe the offer of $5 per snare undervalues tie company The directors of Company A are therefore keen to prevent the bid from going ahead Which THREE of the following defence strategies could be used by the directors of Company Air this situation?
- A. Refer the bid to the Competition Authorizes because of the risk of a large number of employee redundancies if Company B's Did were to be successful
- B. Appeal to their own shareholders that the company should not be broken up because i: has strong growth prospects.
- C. Give existing shareholders the right to buy bonds in the future.
- D. Offer the company to an alternative While Knight bidder.
- E. Inform shareholders of the potential current value of the non-current assets including intangibles, to show that their true value is higher than the bid value.
Answer: A,B,D
NEW QUESTION # 250
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. obtaining maximum output from minimum inputs
- B. obtaining quality inputs at minimum cost.
- C. spending funds so as to achieve the objectives of the entity.
- D. performing activities in the least amount of time possible
Answer: D
NEW QUESTION # 251
An unlisted company which is owned and managed by its original founders has accumulated excess cash following many years of profitable trading.
The Board of Directors is comprised of the four original founders who each hold 25% of the equity share capital.
Which THREE of the following will be significant considerations when deciding on the company's dividend policy?
- A. Income tax rates and the personal tax liabilities of the shareholders.
- B. The cash requirements of the shareholders in the foreseeable future.
- C. The adequacy of the pension funds of the original founders.
- D. The dividend policy of listed companies in the same industry.
- E. The impact of the dividend policy on the company's share price.
Answer: A,B,C
Explanation:
A - Founders' pension/income adequacy is important in a closely held, owner-managed firm.
C - Their future cash needs are central to dividend decisions.
E - Personal tax position of the (few) shareholders is very relevant.
NEW QUESTION # 252
Company MB is in negotiations to acquire the entire share capital of Company BBA. Information about each company is as follows:
It is expected that Company BBA's profit before interest and tax will be $30 million in each of the two years after acquisition. Company AAB is considering how best to structure the offer Company AAB's discount factor and appropriate cost of equity for use in valuing Company BBA is 10% Shareholders taxation implications should be ignored Which of the following provides the shareholders of Company BBA with the highest offer price?
- A. A cash offer at 105% of the share price of Company BBA.
- B. A cash offer of S290 million now.
- C. Cash of $270 million now plus 60% of Company BBA's profit before interest and tax for the two years after acquisition, paid in 2 years' time.
- D. A share-for-share exchange of five shares in Company AAB for every eight shares in Company BBA.
Answer: C
NEW QUESTION # 253
A venture capitalist invests in a company by means of buying:
* 9 million shares for $2 a share and
* 8% bonds with a nominal value of $2 million, repayable at par in 3 years' time.
The venture capitalist expects a return on the equity portion of the investment of at least 20% a year on a compound basis over the first 3 years of the investment.
The company has 10 million shares in issue.
What is the minimum total equity value for the company in 3 years' time required to satisify the venture capitalist's expected return?
Give your answer to the nearest $ million.
$ million.
- A. 35, 35, 34000000, 35000000
- B. 34, 35, 34000000, 35000000
Answer: B
NEW QUESTION # 254
A company enters into a floating rate borrowing with interest due every 12 months over the five year life of the borrowing.
At the same time, the company arranges an interest rate swap to swap the interest profile on the borrowing from floating to fixed rate.
These transactions are designated as a hedge for hedge accounting purposes under IAS 39 Financial Instruments: Recognition and Measurement.
Assuming the hedge is considered to be effective, how would the swap be accounted for 12 months later?
- A. The swap would be shown at nominal value in the statement of financial position and the change in value posted to other comprehensive income.
- B. The swap would be shown at fair value the statement of financial position and the change in value posted to profit or loss.
- C. The swap would be shown at nominal value in the statement of financial position and the change in value posted to profit or loss.
- D. The swap would be shown at fair value the statement of financial position and the change in value posted to other comprehensive income.
Answer: D
Explanation:
The swap would be shown at fair value in the statement of financial position and the change in value posted to other comprehensive income.
NEW QUESTION # 255
A company has a covenant on its 5% long term corporate bond.
* Covenant - The earnings must not fall below $7 million
The bond has a nominal value of $60 million.
It is currently trading at 80% of its nominal value.
The projected earnings before interest and taxation for next year are $11.5 million.
The company retains 80% of its earnings. It pays tax at 20%.
Advise the Board of Directors which of the following covenant conditions will apply next year?
- A. The earnings will be = $5.44 million (The covenant will be breached).
- B. The earnings will be = $6.80 million (The covenant will be breached).
- C. The earnings will be = $11.50 million (The covenant will not be breached).
- D. The earnings will be = $7.28 million (The covenant will not be breached).
Answer: B
NEW QUESTION # 256
Which THREE of the following are the most likely exit routes that apply to a venture capitalist?
- A. Trade sale to another company
- B. Raising long term debt from the company
- C. Liquidation of the company
- D. Flotation via a stock market listing
- E. Selling back to the original owners
Answer: A,D,E
Explanation:
Most likely VC exit routes are:
A). Flotation via a stock market listing (IPO) - classic VC exit.
B). Trade sale to another company - very common exit to a strategic buyer.
C). Selling back to the original owners / management (MBO/MBI) - another recognised route.
Liquidation (D) is a last-resort failure outcome, not a likely planned exit, and (E) raising long-term debt is not an exit at all.
NEW QUESTION # 257
Which of the following best explains why the interest rate parity model is highly effective in practice?
- A. Any divergence from parity can be observed by the market and corrected by arbitrage
- B. Speculative forces drive the interest rates and exchange rates together to achieve parity.
- C. Governments actively manage their exchange rates so that parity holds
- D. Divergence from parity is impossible because exchange rates drive interest rates
Answer: B
NEW QUESTION # 258
Assume today is 31 December 20X1.
A listed mobile phone company has just launched a new phone which is proving to be a great success.
As a direct result of the product's success, earnings are forecast to increase by:
* 5% a year in each of years 20X2 - 20X6
* 3% from 20X7 onwards
Market analysts were very excited to hear the news of the success of the product and future growth forecasts.
Assuming a semi-efficient market applies, which of the following company valuation methods is likely to give the best estimate of the company's equity value today?
- A. P/E valuation based on the company's long term P/E and earnings for the year ended 31 December
20X1. - B. Today's share price x number of shares in issue.
- C. Discounted free cash flow using the company's forecast growth rates.
- D. Today's share price x number of shares in issue + retained earnings.
Answer: B
NEW QUESTION # 259
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. obtaining maximum output from minimum inputs
- B. obtaining quality inputs at minimum cost.
- C. performing activities in the least amount of time possible
- D. spending funds so as to achieve the objectives of the entity.
Answer: A
Explanation:
Economy = obtaining quality inputs at minimum cost # D
Efficiency = obtaining maximum output from minimum inputs # C #
Effectiveness = spending funds so as to achieve the objectives # A
So efficiency is correctly defined by C.
NEW QUESTION # 260
Company BBB has prepared a valuation of a competitor company, Company BBD. Company BBB is intending to acquire a controlling interest in the equity of Company BBD and therefore wants to value only the equity of Company BBD.
The directors of Company BBB have prepared the following valuation of Company BBD:
Value of Equity = 4.63 + 5.14 + 5.56 = S15.33 million
Additional information on Company BBD:
Which THREE of the following are weaknesses of the above valuation?
- A. The valuation is understated as the directors have failed to include a perpetuity factor in the calculations.
- B. The valuation is overstated as the directors have failed to deduct tax from the free cash flows.
- C. Free cash flows to all investors should be discounted at the cost of equity of 10% rather than WACC of
8%. - D. The approach used calculates the value of the total entity not the value of equity.
- E. The valuation is understated as forecast future growth has been ignored beyond year 3.
Answer: A,B,D
NEW QUESTION # 261
XCV can borrow at either 9.5% fixed or the risk-free rate plus 1.3%.
XCV wishes to borrow at a variable rate and thinks that a swap may enable it to do so cheaply BNM can borrow the same principal sum as XCV It can borrow at 10 5% fixed or the risk-free rate plus 2 1 % BNM wishes to raise fixed rate debt XCV and BNM have agreed to use an interest rate swap They will share any savings equally Calculate the effective swap rate that will be paid by XCV.
Give your answer to one decimal place.
Answer:
Explanation:
Risk-free
rate + 1.2%XCV should borrow where it has the comparative advantage (fixed) and then swap:XCV:
Fixed: 9.5%Floating: rf + 1.3%BNM:Fixed: 10.5%Floating: rf + 2.1%XCV is better by 1.0% in fixed and
0.8% in floating, so the total potential gain from a swap:1.0%#0.8%=0.2%1.0\% - 0.8\% = 0.2\%1.0%#0.8%
=0.2% They share this equally # each gets 0.1% benefit.XCV wants floating, so its effective rate should be:
rf+1.3%#0.1%=rf+1.2%\text{rf} + 1.3\% - 0.1\% = \text{rf} + 1.2\%rf+1.3%#0.1%=rf+1.2%
NEW QUESTION # 262
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CIMA CIMAPRA19-F03-1 Actual Questions and Braindumps: https://examtorrent.dumpsactual.com/CIMAPRA19-F03-1-actualtests-dumps.html
