Free Practice CIMA CIMAPRA19-F03-1-ENG Exam Questions 2025

Stay ahead with 100% Free F3 Financial Strategy (Online) CIMAPRA19-F03-1-ENG Dumps Practice Questions

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Total 305 Questions | Updated On: Jan 28, 2025

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Question 1

A company gas a large cash balance but its directors have been unable to identify any positive NPV projects to invest in. Which THREE of the following are advantages of a share repurchase, compared with a one-off large dividend?

A : The shareholder can choose whether to take the cast or not.

B : It increases the number of shares issue.

C : It means that the company will be able to pay lower total dividends in the future.

D : It returns cash to shareholders so that they can choose hew to spend It

E : It will not create an expectation for future increased dividends.

Answer: A,D

Question 2

Company U has made a bid for the entire share capital of Company B.

Company U is offering the shareholders in Company B the option of either a share exchange or a cash

alternative.

Advise the shareholders in Company B which THREE of the following would be considered disadvantages of

accepting the cash consideration?

A : Cash consideration is certain whereas Company U's future share price performance is uncertain.

B : Interest rates on deposit accounts are currently at a historic low and are expected to remain low.

C : Company U is not expected to change its dividend policy post-acquisition.

D : Taxation is payable on realised capital gains.

E : There will be no opportunity to participate in the future economic success of Company U.

Answer: A,B,D

Question 3

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

A : Revalue non-current assets

B : Poison pill strategy

C : Change the Articles of Association to amend voting rights

D : Approach a White Knight

Answer: D

Question 4

A company needs to raise $20 million to finance a project.

It has decided on a rights issue at a discount of 20% to its current market share price.

There are currently 20 million shares in issue with a nominal value of $1 and a market price of $5 per share.

Calculate the terms of the rights issue.

A : 1 new share for every 4 existing shares

B : 1 new share for every 20 existing shares

C : 1 new share for every 5 existing shares

D : 1 new share for every 25 existing shares

Answer: A

Question 5

Company P is a large unlisted food-processing company.

Its current profit before interest and taxation is $4 million, which it expects to be maintainable in the future.

It has a $10 million long-term loan on which it pays interest of 10%.

Corporate tax is paid at the rate of 20%.

The following information on P/E multiples is available:

Which of the following is the best indication of the equity value of Company P?

A : $80 million

B : $40 million

C : $48 million

D : $24 million

Answer: D

Page: 1 / 61

Total 305 Questions | Updated On: Jan 28, 2025

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