Cima chinesedumps legit F3 Exam Download by Pia q313 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:	pia

Question 116

The Treasurer of Z intends to use interest rate options to set an interest rate cap on Z’s borrowings.

Which of the following statement is correct?

Options:

The Treasurer should buy an interested rate floor and sell an interested cap ta the same time

The Treasurer will retain the benefit of movements in interest rates below the floor limit.

The cost of a collar is lower than the cost of a cap a one.

The Treasurer will have to negotiate the options with Z's bank.

Discussion

Question 117

A company is reporting under IFRS 7 Financial Instruments: Disclosures for the first time and the directors are concerned about whether this will lead to the disclosure of information that could affect the company's share price.

The company is based in a country that uses the A$ but 40% of revenue relates to export sales to the USA and priced in US$.

When the company reports under IFRS 7 for the first time, the share price is most likely to:

Options:

Increase due to greater clarity of information available on the extent of US$ risks and how they are managed.

Stay the same since US$ risk can already be quantified from segmental analysis disclosures included elsewhere in the annual report.

Decrease since investors place a lower value on higher risk businesses.

Either increase or decrease depending on market reaction to new information on how financial risk is managed.

Discussion

Question 118

The shares of a company in a high technology industry have been listed on a stock exchange for 10 years. During this period, it has paid no dividends but invested all retained earnings in growth. The company is now entering a period of relatively stable growth and the directors are considering beginning to pay dividends They are reviewing the following suggestions made by members of the board:

• Pay cash dividends linked to growth in earnings

• Use a residual theory approach to establish cash dividends

• Issue scrip dividends (shares instead of cash)

• Continue to pay no dividends as dividends are irrelevant to the value of the company

Which THREE of the following are correct statements for the directors to take into consideration when making a decision about future dividend policy?

Options:

Modigliani and Miller argue that, ignoring taxation, as long as positive net present value projects are invested in, shareholder wealth will increase, regardless of dividend payments.

Shareholder preferences for cash or scrip dividends will be influenced by their tax positions

Ignoring taxation and administrative costs, shareholders can provide their own dividends by selling shares in the market

Neither cash nor scrip dividends will have an effect on earnings per share

The residual theory of dividends suggest that dividends should only be paid after all operating costs have been met.

Discussion

Question 119

A listed company is planning a share repurchase.

The following data applies:

• There are 10 million shares in issue

• The share repurchase will involve buying back 20% of the shares at a price of $0.75

• The company is holding $2 million cash

• Earnings for the current year ended are $2 million

The Directors are concerned about the impact that this repurchase programme will have on the company's cash balance and current year earnings per share (EPS) ratio.

Advise the directors which of the following statements is correct?

Options:

The cash balance will decrease by 75% and EPS will decrease by 25%.

The cash balance will decrease by 75% and EPS will increase by 25%.

The cash balance will decrease by 20% and the EPS will decrease by 25%.

The cash balance will decrease by 20% and the EPS will increase by 25%.

Discussion

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