CIMA F3 PDF Question | F3 Certification Exam Cost

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CIMA F3 Exam Syllabus Topics:

SectionWeightObjectives
Topic 1: Business Valuation40%- Mergers, acquisitions and divestments
  • 1. Financing and post-deal integration
  • 2. Valuation of target companies
- Impairment testing and value management
- Investment appraisal
  • 1. Adjusted present value (APV)
  • 2. NPV, IRR, payback, discounted payback
- Valuation methods
  • 1. Relative valuation: P/E, EV/EBITDA
  • 2. Discounted cash flow (DCF)
  • 3. Asset-based valuation
Topic 2: Financial Risks20%- Risk measurement and assessment
  • 1. Value-at-Risk, sensitivity analysis
- Risk management techniques
  • 1. Hedging strategies
  • 2. Derivatives: futures, forwards, swaps, options
- Types of financial risk
  • 1. Foreign exchange risk
  • 2. Credit and liquidity risk
  • 3. Interest rate risk
- Risk reporting and governance
Topic 3: Financial Policy Decisions15%- Strategic financial objectives and stakeholder impact
  • 1. Taxation and regulatory framework
  • 2. ESG and ethical influences
  • 3. Financial objective setting
- Interaction between investment, financing and dividend decisions
Topic 4: Sources of Long-term Funds25%- Capital structure theories and WACC
  • 1. Modigliani-Miller propositions
  • 2. Cost of capital calculation
- Dividend policy and distribution strategies
- Debt finance
  • 1. Bonds, loans, convertible instruments
  • 2. Leasing and sale-and-leaseback
- Equity finance
  • 1. Flotation and listing methods
  • 2. Ordinary shares, preference shares, rights issues

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CIMA F3 Financial Strategy Sample Questions (Q287-Q292):

NEW QUESTION # 287
Company B is an all equity financed company with a cost of equity of 10%.
It is considering issuing bonds in order to achieve a gearing level of 20% debt and 80% equity.
These bonds will pay a coupon rate of 5% and have an interest yield of 6%.
Company B pays corporate tax at the rate of 25%.
According to Modigliani and Miller's theory of capital structure with tax, what will be Company B's new cost of equity?

Answer: D


NEW QUESTION # 288
Company A is subject to a takeover bid from Company B, both companies operate in the same industry and each of them demand a significant market share Company B h3S made an of an of $5 per share to the shareholders of Company A.
The directors of Company A do not believe the takeover would be h the best interests of the stakeholders and other stakeholders of Company A due to the following reruns
1. Company B has recently taken ever several ether companies resulting in them breaking up the company and se ling on the assets.
2 The directors of Company A believe the offer of $5 per snare undervalues tie company The directors of Company A are therefore keen to prevent the bid from going ahead Which THREE of the following defence strategies could be used by the directors of Company Air this situation?

Answer: A,C,D


NEW QUESTION # 289
A 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?

Answer: B,C,F


NEW QUESTION # 290
A company has in a 5% corporate bond in issue on which there are two loan covenants.
* Interest cover must not fall below 3 times
* Retained earnings for the year must not fall below $3.5 million
The Company has 200 million shares in issue.
The most recent dividend per share was $0.04.
The Company intends increasing dividends by 10% next year.
Financial projections for next year are as follows:

Advise the Board of Directors which of the following will be the status of compliance with the loan covenants next year?

Answer: B


NEW QUESTION # 291
The directors of a multinational group have decided to sell off a loss-making subsidiary and are considering the following methods of divestment:
1. Trade sale to an external buyer
2. A management buyout (MBO)
The MBO team and the external buyer have both offered the same price to the parent company for the subsidiary.
Which of the following is an advantage to the parent company of opting for a MBO compared to a trade sale as the preferred method of divestment?

Answer: C

Explanation:
The parent wants to sell a loss-making subsidiary, with two options:
Trade sale to an external buyer
Management Buyout (MBO) - where the subsidiary's existing management team buys it.
Both offer the same price, so we compare non-price factors.
With an MBO:
The existing management are the buyers. So instead of fearing job losses or big changes, they benefit directly.
That makes them supportive, not hostile.
Therefore, the parent company is more likely to avoid a hostile reaction from key management - this is a clear advantage of choosing an MBO over a trade sale.
Why not the others?
A). Raise the cash more quickly - MBOs often need complex financing (private equity, bank debt), which can actually slow things down versus a straightforward trade sale.
C). Focus on core competencies - that's a benefit of divesting in general, not specific to MBO vs trade sale.
D). Retain the knowledge of key management - in an MBO, management usually leave with the business, so the parent loses their knowledge, not retains it.


NEW QUESTION # 292
......

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