Exam CIMAPRA19-F03-1 Study Solutions - CIMAPRA19-F03-1 Valid Exam Practice

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CIMA CIMAPRA19-F03-1 Exam Syllabus Topics:

Section	Weight	Objectives
Financial Policy Decisions	15%	- Dividend and distribution policy 1. Practical considerations and constraints 2. Theories of dividend relevance - Strategic financial objectives and governance 1. Role of financial strategy in overall corporate strategy 2. Agency theory and stakeholder interests
Sources of Long-Term Finance	25%	- Optimal capital structure 1. Impact of gearing on risk and return 2. Practical determinants of capital structure - Debt and hybrid finance 1. Leasing, convertibles, and warrants 2. Types of debt, terms, and covenants - Equity finance 1. Types of equity and issue methods 2. Cost of equity and capital structure theories
Investment Appraisal and Decisions	25%	- Advanced investment appraisal techniques 1. Adjusted present value and real options 2. Discounted cash flow, NPV, IRR, MIRR - Risk analysis in investment decisions 1. Cost of capital estimation and adjustment 2. Sensitivity, scenario, and simulation analysis
Financial Risk Management	15%	- Types and sources of financial risk 1. Interest rate, foreign exchange, commodity risk 2. Credit and liquidity risk - Risk measurement and assessment 1. Value-at-Risk, duration, gap analysis - Risk mitigation and hedging strategies 1. Use of derivatives: forwards, futures, swaps, options 2. Internal controls and risk policy frameworks
Business Valuation	20%	- Valuation methods 1. Relative valuation and market multiples 2. Asset-based, earnings-based, cash flow-based - Valuation concepts and purposes 1. Valuation for mergers, acquisitions, and disposals 2. Valuation for listing or equity issuance - Pricing and negotiation 1. Determining offer price and terms 2. Post-transaction value creation

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CIMAPRA19-F03-1 Valid Exam Practice, CIMAPRA19-F03-1 Hot Questions

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CIMA F3 Financial Strategy Sample Questions (Q71-Q76):

NEW QUESTION # 71
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. A$50,000
B. A$164,500
C. A$822,500
D. A$82,250

Answer: D

NEW QUESTION # 72
Company A needs to raise AS500 mi lion to invest in a new project and is considering using a pub ic issue of bonds to finance the investment.
Which THREE of the following statements-relating to this bond issue are true?

A. Bonds issues in the corporate debt market are underwritten.
B. Purchasing bonds in the capital markets enables entities to borrow large amounts of finance.
C. The largest issuer of bond i3 the government.
D. The bond market is unregulated making it easier to raise finance
E. A company must be listed before it can issue bones.

Answer: A,B,C

Explanation:
B - The largest issuer of bonds is the government.
C - Issuing bonds in the capital markets allows entities to borrow large amounts.
E - Corporate bond issues are normally underwritten.
(Companies do not have to be listed to issue bonds, and public bond markets are regulated, not unregulated.)

NEW QUESTION # 73
A company plans to cut its dividend but is concerned that the share price will fall. This demonstrates the _____________ effect

A. clientele fall
B. clientele

Answer: B

NEW QUESTION # 74
A venture capitalist invests in a company by means of buying:
* 9 million shares for $2 a share and
* 8% bonds with a nominal value of $2 million, repayable at par in 3 years' time.
The venture capitalist expects a return on the equity portion of the investment of at least 20% a year on a compound basis over the first 3 years of the investment.
The company has 10 million shares in issue.
What is the minimum total equity value for the company in 3 years' time required to satisify the venture capitalist's expected return?
Give your answer to the nearest $ million.
$ million.

Answer:

Explanation:
34, 35, 34000000, 35000000

NEW QUESTION # 75
An aerospace company is planning to diversify into car manufacturing.
Relevant data:

What is the the cost of equity to be used in the WACC for the project appraisal?
Give your answer in percentage, as a whole number.

A. 19%Use the project's business risk (car industry asset beta):Asset beta for car manufacturing = 1.19.Re- gear this beta to reflect the financing (gearing) of the aerospace companyDebt-to-equity ratio = 20:80 # D/E=0.25D/E = 0.25D/E=0.25Tax rate = 30%Re-geared equity beta:#e=#a[1+(1#T)DE]=1.19[1+0.7×0.
25]=1.19×1.175#1.40\beta_e = \beta_a \big[1 + (1 - T)\frac{D}{E}\big] = 1.19 \big[1 + 0.7 \times 0.25
\big] = 1.19 \times 1.175 \approx 1.40#e=#a[1+(1#T)ED]=1.19[1+0.7×0.25]=1.19×1.175#1.40 Apply CAPM to get the cost of equity:Risk-free rate = 5%Market risk premium = 10% ke=Rf+#e×Market Premium=5%+1.40×10%=5%+14%=19%k_e = R_f + \beta_e \times \text{Market Premium} = 5\% + 1.40 \times 10\% = 5\% + 14\% = 19\%ke=Rf+#e×Market Premium=5%+1.40×10%
=5%+14%=19%
B. 19%

Answer: A,B

NEW QUESTION # 76
......

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