Cima certshero free F3 Updates by Ariya q235 vce pdf

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Exam Name:	Financial Strategy
Exam Code:	F3 Dumps
Vendor:	CIMA	Certification:	CIMA Strategic level
Questions:	435 Q&A's	Shared By:	ariya

Question 28

A company's current earnings before interest and taxation are $5 million.

These are expected to remain constant for the forseeable future.

The company has 10 million shares in issue which currently trade at $3.60.

It also has a $10 million long term floating rate loan.

The current interest rate on this loan is 5%.

The company pays tax at 20%.

The company expects interest rates to increase next year to 6% and it's Price/Earnings (P/E) ratio to move to 9.5 times by the end of next year.

What percentage reduction in the share price will occur by the end of next year if the interest rate increase and the P/E movement both occur?

Options:

Reduction of 7%

Reduction of 5%

Reduction of 1%

Reduction of 0%

Discussion

Question 29

ADC is planning to acquire DEF in order to benefit from the expertise of DEF's owner ‘managers Both are Listed companies. ADC is trying to decide whether to offer cash or shares in consideration for DEF's shares.

Which THREE of the following are advantages to ABC of offering shares to acquire CEF?

Options:

It shares tie benefits of future growth with the DCT shareholder.

It dilutes ownership in ABC.

It incentivises DEF to continue creating value for the combined group

It results in a tax saving for ABC.

The risk of poor future performance of the acquisition is shared with the DEF company shareholder.

It preserves liquidity

Discussion

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Question 30

A company with a market capitalisation of S50million is considering raising $1 million debt to fund a new 10-year capital investment protect

The value of this issue is considered to be small in comparison to the company's market capitalisation

The company is considering whether to raise the debt finance by either a "bond private placing' or a 'public bond issue.

Which THREE of the following statements are correct?

Options:

An initial public bond issue will be administratively complex and relatively expensive for the relatively small amount of debt being raised whereas a bond private placing will be relatively less complex

An average investor is made aware of a potential initial public bond issue whereas the average investor is only made aware of a bond private placing after it has occurred.

The company's credit rating will be a key element in determining the interest rate payable and the potential success of either the public bond issue or the bond private placing

An initial public bond issue does not need to be underwritten whereas a bond private placing must be underwritten.

An initial public bond issue can be arranged relatively quickly whereas a bond private placing can take up to a year to arrange.

Discussion

Question 31

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:

The T$ weakens against the R$ over time

The R$ strengthens against the S$ over time.

The R$ strengthens against the U$ over time.

The R$ weakens against the U$ over time

Discussion

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