Cima certshero free Access F3 New Release by Maddie q313 vce pdf

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

Question 88

Z wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate it pays. Z can borrow floating at Libor ' 1, and fixed at 10%.

Which of the following companies would be the most appropriate for Z to enter into a swap with?

Options:

Company A - it can borrow floating L +1 ½ and fixed at 9.5%

Company D - it can borrow at L +1 ½ and fixed at 10.5%

Company C - it can borrow at L +1 ½ and fixed at 9%

Company E - it can borrow floating at L +1 ½ and fixed at 12%

Discussion

Question 89

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?

Options:

Loan stock in DFG for the current value of LMB

DFG shares for the current value of LMB

Cash for the current value of LMB

DFG shares for a percentage of the current value of LMB plus a three year earn-out arrangement

Discussion

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Question 90

A company is in the process of issuing a 10 year $100 million bond and is considering using an interest rate swap to change the interest profile on some or all of the $100 million new finance.

The company has a target fixed versus floating rate debt profile of 1:1. Before issuing the bond its debt profile was as follows:

Questions 90

Which of the following is the most appropriate interest rate swap structure for the company?

Options:

Pay fixed receive floating interest rate swap for $100 million.

Pay fixed receive floating interest rate swap for $50 million.

Receive fixed pay floating interest rate swap for $100 million.

Receive fixed pay floating interest rate swap for $50 million.

Discussion

Question 91

X exports goods to customers in a number of small countries Asia. At present, X invoices customers in X's home currency.

The Sales Director has proposed that X should begin to invoice in the customers currency, and the Treasurers considering the implications of the proposal.

Which TWO of the following statement are correct?

Options:

X may be able to sell the receipts forward.

If the proposal is adopted, X will have a lower effective sales price per unit due to exchange rate fluctuations.

X will know advance the amount of home currency it will receive for the export sales.

The overseas customers may have difficulty obtaining X's name currency with which to make the purchases, so the Sales Director’s proposal may increase sales.

The customer will tear the foreign exchange risk and will only buy from X if they are prepared to accept this.