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CIMA Updated F3 Exam Questions and Answers by amna

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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: amna
Question 60

Company A is located in Country A, where the currency is the A$.

It is listed on the local stock market which was set up 10 years ago.

It plans a takeover of Company B, which is located in Country B where the currency is the B$, and where the stock market has been operating for over 100 years.

Company A is considering how to finance the acquisition, and how the shareholders of Company B might respond to a share exchange or cash (paid in B$).

 

Which of the following is likely to explain why the shareholders of Company B would prefer a share exchange as opposed to a cash offer?

Options:

A.

It would allow them to realise their investment and make a capital gain.

B.

It would avoid them being exposed to foreign currency risk.

C.

They would receive shares in a market that is likely to be more efficient.

D.

It would enable them to benefit from the future performance of the combined entity.

Discussion
Question 61

A profitable company wishes to dispose of a loss-making division that generated negative free cashflow in the last financial year.

The division requires significant new investment to return it to profitability.

 

Which of the following valuation approaches is likely to be the most useful to the company when negotiating the sales price?

Options:

A.

Dividend growth model

B.

Asset basis

C.

Discounted forecast free cashflow

D.

P/E ratio applied to forecast earnings next year

Discussion
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Question 62

A listed company is considering either a one-off special divided or a share repurchase scheme to reduce its surplus cash level.

Identify TWO advantages that a one-off special payment has over a share repurchase scheme.

Options:

A.

It will change balance of share owners.

B.

It will reduce the possibility of a hostile takeholder

C.

It allows shareholder a choice of option in or out of the payment.

D.

It is easier to arrange than a share repurchase

E.

It would result in a transfer of wealth back to the shareholder

Discussion
Question 63

Company RRR is a well-established, unlisted, road freight company.

In recent years RRR has come under pressure to improve its customer service and has had some success in doing this However, the cost of improved service levels has resulted in it making small losses in its latest financial year. This is the first time RRR has not been profitable.

RRR uses a 'residual' dividend policy and has paid dividends twice in the last 10 years.

Which of the following methods would be most appropriate for valuing RRR?

Options:

A.

Valuing the tangible assets and intangible assets of RRR.

B.

The P/E method, adjusting the P/E of a listed company downwards to reflect RRR's unlisted status.

C.

The earnings yield method, adjusting the earnings yield of a listed company downwards to reflect RRR's unlisted status.

D.

The dividend valuation model.

Discussion
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