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CIMA F3 Exam With Confidence Using Practice Dumps

Exam Code:
F3
Exam Name:
Financial Strategy
Certification:
CIMA Strategic level
Vendor:
CIMA
Questions:
435
Last Updated:
Apr 4, 2025
Exam Status:
Stable
CIMA F3

F3: CIMA Strategic level Exam 2025 Study Guide Pdf and Test Engine

Are you worried about passing the CIMA F3 (Financial Strategy) exam? Download the most recent CIMA F3 braindumps with answers that are 100% real. After downloading the CIMA F3 exam dumps training , you can receive 99 days of free updates, making this website one of the best options to save additional money. In order to help you prepare for the CIMA F3 exam questions and verified answers by IT certified experts, CertsTopics has put together a complete collection of dumps questions and answers. To help you prepare and pass the CIMA F3 exam on your first attempt, we have compiled actual exam questions and their answers. 

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Financial Strategy Questions and Answers

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Question 1

A company wishes to raise additional debt finance and is assessing the impact this will have on key ratios. 

The following data currently applies:

   • Profit before interest and tax for the current year is $500,000

   • Long term debt of $300,000 at a fixed interest rate of 5%

   • 250,000 shares in issue with a share price of $8

The company plans to borrow an additional $200,000 on the first day of the year to invest in new project which will improve annual profit before interest and tax by $24,000.

The additional debt would carry an interest rate of 3%.

Assume the number of shares in issue remain constant but the share price will increase to $8.50 after the investment.

The rate of corporate income tax is 30%.

 

After the investment, which of the following statements is correct?

Options:

A.

Interest cover will fall; P/E ratio will fall.

B.

Interest cover will fall; P/E ratio will rise.

C.

Interest cover will rise; P/E ratio will rise.

D.

Interest cover will rise; P/E ratio will fall.

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Question 2

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?

Options:

A.

The convertible bond may not dilute control as the bond holder has an option to choose conversion.

B.

The coupon rate on the convertible bond will be lower than that on a non-convertible bond.

C.

When converted into shares, the company will receive a cash inflow which can be used for future investments.

D.

Issuing a convertible bond will have a more favourable impact on the gearing ratio than a non-convertible bond.

E.

Over the life of the bond, a convertible will be more expensive than a non-convertible.

Question 3

Company C has received an unwelcome takeover bid from Company P.

Company P is approximately twice the size of Company C based on market capitalisation.

Although the two companies have some common business interests, the main aim of the bid is diversification for Company P.

The offer from Company P is a share exchange of 2 shares in Company P for 3 shares in Company C.

There is a cash alternative of $5.50 for each Company C share.

Company C has substantial cash balances which the directors were planning to use to fund an acquisition.

These plans have not been announced to the market.

 

The following share price information is relevant. All prices are in $.

  

 

Which of the following would be the most appropriate action by Company C's directors following receipt of this hostile bid?

Options:

A.

Write to shareholders explaining fully why the company's share price is undervalued.

B.

Change the Articles of Association to increase the percentage of shareholder votes required to approve a takeover.

C.

Pay a one-off special dividend.

D.

Refer the bid to the country's competition authorities.

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