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CIMA Updated F3 Exam Questions and Answers by amanda

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CIMA F3 Exam Overview :

Exam Name: Financial Strategy
Exam Code: F3 Dumps
Vendor: CIMA Certification: CIMA Strategic
Questions: 393 Q&A's Shared By: amanda
Question 24

Country X's short-term interest rates are slightly higher than its long-term rates. Which THREE of the following statements are correct?

Options:

A.

This difference may reverse.

B.

Country X's currency is expected to strengthen in the long-term.

C.

Interest rates will definitely fall.

D.

Interest rates are expected to fall.

E.

A long-term borrower would save by taking out a short-term loan and then refinancing

Discussion
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Question 25

A manufacturing company based in Country R. where the currency is the R$, has an objective of maintaining an operating profit margin of at least 10% each year

Relevant data:

• The company makes sales to Country S whose currency is the SS It also makes sales to Country T whose currency is the T$ " All purchases are from Country U whose currency is the US.

• The settlement of an transactions is in the currency of the customer or supplier

Which of the following changes would be most likely to help the company achieve its objective?

Options:

A.

The T$ weakens against the R$ over time

B.

The R$ strengthens against the S$ over time.

C.

The R$ strengthens against the U$ over time.

D.

The R$ weakens against the U$ over time

Discussion
Question 26

A company based in the USA has a substantial fixed rate borrowing at an interest rate of 3.5% and wishes to swap a part of this to a floating rate to take advantage of reducing interest rates Its bank has quoted swap rates of 3 4%-3 5% against 12-month USD risk-free rate.

What is the overall interest rate achieved by the company under this borrowing plus swap combination?

Options:

A.

12-month USD risk-free rate minus 0 1 % (where 0 1 % = the fixed rate of 3.6% minus the swap rate of 3 4%)

B.

12-month USD risk-free rate

C.

12-month USD risk-free rate plus 0 1% (where 0.1 % = the fixed rate of 3.5% minus the swap rate of 3 4%) D. Unchanged at 3.60% as this is the same as the swap rate

Discussion
Question 27

A company has in a 5% corporate bond in issue on which there are two loan covenants.

   • Interest cover must not fall below 3 times

   • Retained earnings for the year must not fall below $3.5 million

The Company has 200 million shares in issue.

The most recent dividend per share was $0.04.

The Company intends increasing dividends by 10% next year.

 

Financial projections for next year are as follows:

 

Advise the Board of Directors which of the following will be the status of compliance with the loan covenants next year?

Options:

A.

The company will be in compliance with both covenants.

B.

The company will be in breach of both covenants.

C.

The company will breach the covenant in respect of retained earnings only.

D.

The company will be in breach of the covenant in respect of interest cover only.

Discussion
Page: 6 / 29
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