How to pass the Cima F3 exam in first attempt?

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CIMA F3 - Financial Strategy exam in just 24
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• Question No 1
• Which THREE of the following remain unchanged
  over the life of a 10 year fixed rate bond?
• The coupon rate
• The yield
• The market value
• The nominal value
• The amount payable on maturity
• Answer A, D, E Question No 2
• Companies A, B, C and D
• Are based in a country that uses the K as its
  currency.
• Have an objective to grow operating profit year
  on year.
• Have the same total levels of revenue and cost.
• Trade with companies or individuals in the
  eurozone. All import and export trade with
  companies or individuals in the eurozone is
  priced in EUR.
• Typical import/export trade for each company in a
  year are as follows
• Which company's growth objective is most
  sensitive to a movement in the EUR/K exchange
  rate?
• Company A
• Company B
• Company C
• Company D

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• A. 5.00
• B. 5.75
• C. 5.70
• D. 6.25
• Answer B Question No 4
• A private company manufactures goods for export,
  the goods are priced in foreign currency B. The
  company is partly owned by members of the
  founding family and partly by a venture
  capitalist who is helping to grow the business
  rapidly in preparation for a planned listing in
  three years' time. The company therefore has
  significant long term exposure to the B. This
  exposure is hedged up to 24 months into the
  future based on highly probable forecast future
  revenue streams. The company does not apply hedge
  accounting and this has led to high volatility
  in reported earnings. Which of the following best
  explains why external consultants have recently
  advised the company to apply hedge accounting?
• To provide a more appropriate earnings figure for
  use in calculating the annual dividend.
• To make it easier for the market to value the
  business when it is listed on the Stock
  Exchange.
• To ensure that the venture capitalist receives
  regular annual returns on its investment.
• To fully adopt IFRS in preparation for listing
  the company.
• Answer B Question No 5
• A company is currently all-equity financed. The
  directors are planning to raise long term debt
  to finance a new project. The debtequity ratio
  after the bond issue would be 3060 based on
  estimated market values. According to Modigliani
  and Miller's Theory of Capital Structure without
  tax, the company's cost of equity would
• Stay the same.
• Decrease.
• Increase.
• Increase or decrease depending on the bond's
  coupon rate.
• Answer C

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• Question No 6
• When valuing an unlisted company, a P/E ratio for
  a similar listed company may be used but
  adjustments to the P/E ratio may be necessary.
  Which THREE of the following factors would
  justify a reduction in the proxy p/e ratio before
  use?
• The relative lack of marketability of unlisted
  company shares.
• A lower level of scrutiny and regulation for
  unlisted companies.
• Unlisted companies being generally smaller and
  less established.
• Control premium not being included within the
  proxy p/e ratio used.
• The forecast earnings growth being relatively
  higher in the unlisted company.
• A profit item within the unlisted company's
  latest earnings which will not reoccur.
• Answer A, B, C Question No 7
• A company's Board of Directors wishes to
  determine a range of values for its equity.
• The following information is available Estimated
  net asset values (total asset less total
  liabilities including borrowings)
• Net book value 20 million
• Net realisable value 25 million
• Free cash flows to equity 3.5 million each
  year indefinitely, post-tax.
• Cost of equity 10
• Weighted Average Cost of Capital 7
• Advise the Board on reasonable minimum and
  maximum values for the equity.
• Minimum value 25.0 million, and maximum value
  35.0 million
• Minimum value 25.0 million, and maximum value
  50.0 million

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• D. It does not account for tangible assets.
• Answer A Question No 9
• Company Z has identified four potential
  acquisition targets companies A, B, C and D.
  Company Z has a current equity market value of
  580 million. The price it would have to pay for
  the equity of each company is as follows Only
  one of the target companies can be acquired and
  the consideration will be paid in cash. The
  following estimations of the new combined value
  of Company Z have been prepared for each
  acquisition before deduction of the cash
  consideration Ignoring any premium paid on
  acquisition, which acquisition should the
  directors pursue?
• A
• B
• C
• D
• Answer C Question No 10
• A profit-seeking company intends to acquire
  another company for a variety of reasons,
  primarily to enhance shareholder wealth. Which
  THREE of the following offer the greatest
  potential for enhancing shareholder wealth?
• Achieving more press coverage for the company.
• Creating new opportunities for employees.
• Achieving greater cultural diversity.
• Acquiring Intellectual Property assets.
• Exploiting production synergies.
• Elimination of existing competition.
• Answer D, E, F
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