Valid F3 Exam Syllabus - Authorized F3 Test Dumps

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CIMA F3 Exam is a comprehensive exam that covers a range of financial strategy topics. It is essential for anyone who wants to work in management accounting or financial management and requires a significant amount of preparation. With the right study resources and dedication, candidates can successfully pass the exam and take the next step in their professional development.

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CIMA CIMAPRA19-F03-1 exam is an essential certification for professionals pursuing a career in finance. F3 exam is designed to test the candidate's understanding and knowledge of financial strategy and management. It is a challenging exam that requires a thorough understanding of financial concepts and their application in real-world scenarios. F3 Exam is intended for professionals who have already completed the CIMA Certificate in Business Accounting and the CIMA Operational and Management Level exams.

CIMA F3 Financial Strategy Sample Questions (Q106-Q111):

NEW QUESTION # 106
A company is considering the issue of a convertible bond compared to a straight bond issue (non-convertible bond).
Director A is concerned that issuing a convertible bond will upset the shareholders for the following reasons:
* it will dilute their control
* the interest payments will be higher therefore reducing liquidity
* it will increase the gearing ratio therefore increasing financial risk Director B disagrees, and is preparing a board paper to promote the issue of the convertible bond rather than a non-convertible.
Advise the Director B which THREE of the following statements should be included in his board paper to promote the issue of the convertible bond?

Answer: A,B,D

Explanation:
A). May not dilute control - A convertible bond does not cause immediate dilution. Bondholders only become shareholders if they choose to convert, usually when the share price performs well. So dilution is potential and future, not automatic at issue.
B). Lower coupon - A core feature of convertibles is that investors accept a lower interest (coupon) rate than on an equivalent straight bond, because they are being compensated by the conversion option. This directly rebuts the concern that interest payments will be higher.
D). More favourable impact on gearing - Compared with issuing a straight bond, a convertible is often viewed as "quasi-equity". Under modern financial reporting, part of the convertible may be classified as equity, and if conversion happens later, the bond liability disappears and is replaced by shares, reducing gearing. So, from a strategic financing perspective, convertibles are typically seen as less damaging to gearing than an equivalent non-convertible bond.
Options C (no cash inflow on conversion) and E (more expensive over life) are incorrect.


NEW QUESTION # 107
Company AEE has a 10 year 6% corporate bond in issue which has a nominal value of $400 million, which is currently trading at 95%. The bond is secured on the company's property The Board of Directors has calculated the equity value of Company AEE as follows;

Which THREE of the following are errors in the valuation?

Answer: A,B,E


NEW QUESTION # 108
A company is planning to issue a 5 year $100 million bond at a fixed rate of 6%.
It is also considering whether or not to enter into a 10 year $100 million swap to receive 5% fixed and pay Libor + 1% once a year.
The company predicts that Libor will be 4% over the life of the 5 years.
What is the impact of the swap on the company's annual interest cost assuming that the Libor prediction is correct?

Answer: B

Explanation:
Bond alone: pay 6% on $100m = 6m per year.
Add swap (receive 5% fixed, pay Libor + 1):
Net rate = 6% (bond) # 5% (received) + (Libor + 1%).
With Libor = 4% # 6 # 5 + (4 + 1) = 5% total.
Interest cost falls from 6% to 5% # 1% reduction.


NEW QUESTION # 109
M is an accountant who wishes to take out a forward rate agreement as a hedging instrument but the company treasurer has advised that a short-term interest rate future would be a better option.
Which of the following is true of a short-term interest rate future?

Answer: B


NEW QUESTION # 110
RR has agreed to sell goods to XX for S20.000 XX will pay when the goods are delivered in 6 months time. RR's home currency is the £- The current exchange rate is 4.3 £/S. The projected inflation rate for the S is 2.8%, and for the E 4 6%.
When RR receives payment for its goods, what will the value be to the nearest pound?

Answer: B


NEW QUESTION # 111
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