This page was exported from Exam for engine [ http://blog.test4engine.com ] Export date:Mon Nov 18 2:41:58 2024 / +0000 GMT ___________________________________________________ Title: 2024 CIMAPRA19-F03-1 Premium Files Test pdf - Free Dumps Collection [Q166-Q180] --------------------------------------------------- 2024 CIMAPRA19-F03-1 Premium Files Test pdf - Free Dumps Collection Get ready to pass the CIMAPRA19-F03-1 Exam right now using our CIMA Strategic level Exam Package CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) Exam is a challenging exam that requires candidates to have a solid understanding of financial strategy concepts and the ability to apply them to real-world scenarios. CIMAPRA19-F03-1 exam is designed to test candidates' ability to analyze financial data, identify financial risks, and make sound financial decisions. Candidates who pass the exam will be awarded a CIMA professional qualification, which is highly respected in the finance industry and recognized globally.   QUESTION 166A company has 8% convertible bonds in issue. The bonds are convertible in 3 years time at a ratio of 20 ordinary shares per $100 nominal value bond.Each share:* has a current market value of $5.60* is expected to grow at 5% each yearWhat is the expected conversion value of each $100 nominal value bond in 3 years’ time?  $129.6  $117.6  $100.0  $112.0 QUESTION 167A company is financed as follows:* 400 million $1 shares quoted at $3.00 each.* $800 million 5% bonds quoted at par.The company plans to raise $200 million long term debt to finance a project with a net present value of$100 million.The bank that is providing the debt is insisting on a maximum gearing level covenant.Gearing will be based on market values and calculated as debt/(debt + equity).What is the lowest figure for the gearing covenant that the bank could impose without the company breaching the agreement?  43%  44%  45%  46% QUESTION 168A 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?  The convertible bond may not dilute control as the bond holder has an option to choose conversion.  The coupon rate on the convertible bond will be lower than that on a non-convertible bond.  When converted into shares, the company will receive a cash inflow which can be used for future investments.  Issuing a convertible bond will have a more favourable impact on the gearing ratio than a non- convertible bond.  Over the life of the bond, a convertible will be more expensive than a non-convertible. QUESTION 169It is now 1 January 20X0.Company V, a private equity company, is considering the acquisition of 40% of the equity of Company A for a total amount of $15 million.Company A has been established to develop a new type of engine which will be launched at the end of 20X1.Company A is forecasting that the new engine will result in free cash flows to equity of $2m in its first year of operation and that this will rise by 8% per year for the foreseeable future.The new engine is the only commercial activity that Company A is involved in.Company V intends to sell its stake in Company A when the new engine is launched.Company A has a cost of equity of 12%.Assuming that Company V receives an amount that reflects the present value of their shares in company A.what is the estimated annual rate of return to Company V from this investment? (To the nearest %)  3%  10%  16%  33% QUESTION 170CI IJ has decided to move its production plant to overseas country X.This would make the product cheaper to produce.The technology used to make the product is very advanced and some of the skilled staff would have to move to country X.The Production Director has identified that there are some political risks in moving to county X.For each of the political risks of moving to country X shown below, select the correct method for reducing the risk. QUESTION 171Which three of the following are most likely be primary objectives for a newly established, unincorporated entity in the service sector?  Increasing the dividend payment year on year  Increasing Revenue  Providing consistently high levels service quality  Maintaining sufficient liquidity in the business to avoid overtrading  Reaching an optimum capital structure QUESTION 172RST wishes to raise at least $40 million of new equity by issuing up to 10 million new equity shares at a minimum price of $3.00 under an offer for sale by tender. It receives the following tender offers:What is the maximum amount that RST can raise by this share issue?(Give your answer to the nearest $ million). 49QUESTION 173A listed company is financed by debt and equity.If it increases the proportion of debt in its capital structure it would be in danger of breaching a debt covenant imposed by one of its lenders.The following data is relevant:The company now requires $800 million additional funding for a major expansion programme.Which of the following is the most appropriate as a source of finance for this expansion programme?  Retained earnings  Private placement of a bond  Rights issue  Bank overdraft QUESTION 174VVV has a floating rate loan that it wishes to replace with a fixed rate. The cost of the existing loan is the risk-free rate + 3%. VW would have to pay a fixed rate of 7% on a fixed rate loan VVVs bank has found a potential counterparty for a swap arrangement.The counterparty wishes to raise a variable rate loan It would pay the risk-free rate +1 % on a variable rate loan and 8% on a fixed rate.The bank will require 10% of the savings from the swap and WV and the counterparty will share the remaining saving equally.Calculate VWs effective rate of interest from this swap arrangement.  VVV would pay 5.2%  VVV would pay 5.65%  VVV would pay the risk-free rate + 1 %  VVV would pay 5.5% QUESTION 175Listed Company A has prepared a valuation of an unlisted company. Company B. to achieve vertical integration Company A is intending to acquire a controlling interest in the equity of Company B and therefore wants to value only the equity of Company B.The assistant accountant of Company A has prepared the following valuation of Company B’s equity using the dividend valuation model (DVM):Where:* S2 million is Company B’s most recent dividend* 5% is Company B’s average dividend growth rate over the last 5 years* 10% is a cost of equity calculated using the capital asset pricing model (CAPM), based on the industry average beta factorWhich THREE of the following are valid criticisms of the valuation of Company B’s equity prepared by the assistant accountant?  The DVM calculation should use Company A’s cost of equity rather than Company B’s cost of equity  It is better to use the present value of earnings rather than present value of dividends to value a controlling interest  The 5% growth rate may not reflect the future growth of Company B.  The beta factor used may not reflect Company B’s financial risk.  An unlisted company cannot use the capital asset pricing model to calculate its cost of equity QUESTION 176The directors of the following four entities have been discussing dividend policy:Which of these four entities is most likely to have a residual dividend policy?  A  B  C  D QUESTION 177Company Z wishes to borrow $50 million for 10 years at a fixed rate of interest.Two alternative approaches are being considered:1. Issue a 10 year bond at a fixed rate of 6%, or2. Borrow from the bank at Libor +2.5% for a 10 year period and simultaneously enter into a 10 year interest rate swap.Current 10 year swap rates against Libor are 4.0% – 4.2%.What is the difference in the net interest cost between the two alternative approaches?  Approach A is 0.7% a year less expensive  Approach A is 0.5% a year less expensive  Approach B is 2.0% a year less expensive  Approach B is 2.2% a year less expensive QUESTION 178Which of the following statements about IFRS 7 Financial Instruments: Disclosures is true?  IFRS 7 only applies to entities that are designated as financial institutions by a regulatory authority.  IFRS 7 requires disclosures to be given for each separate class of financial instruments.  The main requirement of IFRS 7 is for qualitative disclosures relating to financial instruments and market risks.  IFRS 7 requires sensitivity analysis in relation to credit risk. QUESTION 179An entity prepares financial statements to 31 December each year. The following data applies:1 December 20X0* The entity purchased some inventory for $400,000.* In order to protect the inventory against adverse changes in fair value the entity entered into a futures contract to sell the inventory for a fixed price on 31 January 20X1.* The entity designated this contract as a fair value hedge of the value of the inventory.31 December 20X0* The inventory had a fair value of $480,000 and the futures contract had a fair value of $75,000 (a financial liability).What will be the impact on the statement of profit or loss and other comprehensive income for the year ended31 December 20X0 in respect of the change in the value of the inventory and the futures contract?  A loss of $75,000 will be recognised in profit or loss.  A loss of $75,000 will be recognised in other comprehensive income.  A net gain of $5,000 will be recognised in profit or loss.  A net gain of $5,000 will be recognised in other comprehensive income. QUESTION 180A company’s gearing is well below its optimal level and therefore it is considering implementing a share re-purchase programme.This programme will be funded from the proceeds of a planned new long-term bond issue.Its financial projections show no change to next year’s expected earnings.As a result, the company plans to pay the same total dividend in future years.If the share re-purchase is implemented, which THREE of the following measures are most likely to decrease?  The Weighted Average Cost of Capital  The cost of equity  The interest cover  Next year’s dividend per share  The gearing, based on book value (debt รท (debt + equity))  The number of shares in issue  Loading … CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) certification exam is designed for individuals who are seeking to enhance their understanding of financial strategy principles and practices. CIMAPRA19-F03-1 exam evaluates the candidate's knowledge in creating and implementing financial strategies that support the long-term goals of an organization. Candidates will need to have a strong background in finance, coupled with years of experience working in finance-related roles.   Master 2024 Latest The Questions CIMA Strategic level and Pass CIMAPRA19-F03-1 Real Exam!: https://www.test4engine.com/CIMAPRA19-F03-1_exam-latest-braindumps.html --------------------------------------------------- Images: https://blog.test4engine.com/wp-content/plugins/watu/loading.gif https://blog.test4engine.com/wp-content/plugins/watu/loading.gif --------------------------------------------------- --------------------------------------------------- Post date: 2024-07-06 13:14:17 Post date GMT: 2024-07-06 13:14:17 Post modified date: 2024-07-06 13:14:17 Post modified date GMT: 2024-07-06 13:14:17