Pass CIMA F3 exam Dumps 100 Pass Guarantee With Latest Demo [Q54-Q68]

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Pass CIMA F3 exam Dumps 100 Pass Guarantee With Latest Demo

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QUESTION 54
Company A is based in country A with the AS as its functional currency. It expects to receive BS20 million from Company B in settlement of an export invoice.
The current exchange rate is A$1 =B$2 and the daily standard deviation of this exchange rate = 0 5%
What is the one-day 95% VaR in AS?

A$50,000

A$164,500

A$82,250

A$822,500

QUESTION 55
Company A, a listed company, plans to acquire Company T, which is also listed.
Additional information is:
* Company A has 150 million shares in issue, with market price currently at $7.00 per share.
* Company T has 120 million shares in issue,. with market price currently at $6.00 each share.
* Synergies valued at $50 million are expected to arise from the acquisition.
* The terms of the offer will be 2 shares in A for 3 shares in T.
Assuming the offer is accepted and the synergies are realised, what should the post-acquisition price of each of Company A’s shares be?
Give your answer to two decimal places.

8.24

7.24

QUESTION 56
The primary objective of a public sector entity is to ensure value for money is generated.
Value for money is defined as performing an activity so as to simultaneously achieve economy, efficiency and effectiveness Efficiency is defined as:

spending funds so as to achieve the objectives of the entity.

performing activities in the least amount of time possible

obtaining maximum output from minimum inputs

obtaining quality inputs at minimum cost.

QUESTION 57
A company has just received a hostile bid. Which of the following response strategies could be considered?

Revalue non-current assets

Poison pill strategy

Change the Articles of Association to amend voting rights

Approach a White Knight

QUESTION 58
PYP is a listed courier company. It is looking to raise new finance to fit each of its delivery vans with new equipment to allow improved parcel tracking for customers The senior management team of PYP have decided on a 10-year secured bond to finance this investment- Which TWO of the following variables are most likely to decrease the yield to maturity of the bond?

Changing the term of the bond from 1 0 years to 5 years to match the expected life of the new equipment

The announcement of a new contract for PYP that will increase operating profits by 5% over the next 5 years.

The senior management team decide to issue a convertible bond rather than a conventional bond

The senior management team decide to issue an unsecured bond rather than a secured bond

QUESTION 59
A listed company with a growing share price plans to finance a four-year research project with debt.
The main criterion for the finance is to minimise the annual cashflow payments on the debt.
The research will be sold at the end of the project.
Which of the following would be the most suitable financing method for the company?

Bonds with warrants

Finance lease

Standard bonds

Bank loan

QUESTION 60
The directors of a multinational group have decided to sell off a loss-making subsidiary and are considering the following methods of divestment:
1. Trade sale to an external buyer
2. A management buyout (MBC)
The MDO team and the external buyer have both offered the same price to the parent company for the subsidiary.
Which of the following is an advantage to the parent company of opting for a MBO compared to a trade sale as the preferred method of divestment?

Raise the cash more quickly.

Avoid a hostile reaction from key management.

Focus on the core competencies of the business

Retain the know edge of key management.

QUESTION 61
G purchased a put option that grants the right to cap the interest on a loan at 10.0%. Simultaneously, G sold a call option that grants the holder the benefits of any decrease if interest rates fall below 8.5%.
Which THREE possible s would be consistent with G’s behavior?

G is willing to risk the loss of savings from a fall in interest rates if that offsets the cost of limiting the cost of rises.

G’s strategy is to ensure that its interest rates lie between 8.5% and 10.0%.

G is concerned that interest rates may rise above 10.0%.

G is concerned that interest rates may rise above 8.5%.

G is concerned that interest rates may fall below 10%.

QUESTION 62
A company’s latest accounts show profit after tax of $20.0 million, after deducting interest of $5.0 million. The company expects earnings to grow at 5% per annum indefinitely.
The company has estimated its cost of equity at 12%, which is included in the company WACC of 10%.
Assuming that profit after tax is equivalent to cash flows, what is the value of the equity capital?
Give your answer to the nearest $ million.

QUESTION 63
The table below shows the forecast for a company’s next financial year:

The forecast incorporates the following assumptions:
* 25% of operating costs are variable
* Debt finance comprises a $400 million fixed rate loan at 5%
* Corporate income tax is paid at 25%
The company plans to do the following next year from the forecast earnings on the assumption that earnings will be equivalent to free cash flow:
* Pay a total dividend of $20 million
* Invest $40 million in new projects
What is the maximum % reduction in operating activity that could occur next year before the company’s dividend and investment plans are affected?
Give your answer to the nearest 0.1%.

QUESTION 64
Which of the following statements best describes a residual dividend policy?

Dividends are paid only after the on-going operational needs of the business have been met.

Dividends are paid only if no further positive NPV projects are available.

All surplus earnings are invested back into the business.

Dividends are paid at a constant rate.

QUESTION 65
A listed company is planning to raise $21.6 million to finance a new project with a positive net present value of $5 million. The finance is to be raised via a rights issue at a 10% discount to the current share price. There are currently 100 million shares in issue, trading at $2.00 each.
Taking the new project into account, what would the theoretical ex-rights price be?
Give your answer to two decimal places.

QUESTION 66
A company generates and distributes electricity and gas to households and businesses.
Forecast results for the next financial year are as follows:

The Industry Regulator has announced a new price cap of $1.50 per Kilowatt.
The company expects this to cause consumption to rise by 10% but costs would remained unaltered.
The price cap is expected to cause the company’s net profit to fall to:

$47.5 million profit

$27.5 million profit

$20.0 million profit

$35.0 million loss

QUESTION 67
A company generates and distributes electricity and gas to households and businesses.
Forecast results for the next financial year are as follows:
The Industry Regulator has announced a new price cap of $1.50 per Kilowatt.
The company expects this to cause consumption to rise by 10% but costs would remained unaltered.
The price cap is expected to cause the company’s net profit to fall to:

$47.5 million profit

$27.5 million profit

$20.0 million profit

$35.0 million loss

QUESTION 68
X exports goods to customers in a number of small countries Asi
a. 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?

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.