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Free CIMA CIMAPRO19-F03-1-ENG Exam Questions

Try our Free Demo Practice Tests for Comprehensive CIMAPRO19-F03-1-ENG Exam Preparation

  • CIMA CIMAPRO19-F03-1-ENG Exam Questions
  • Provided By: CIMA
  • Exam: F3 Financial Strategy
  • Certification: CIMA Professional Qualification
  • Total Questions: 305
  • Updated On: Apr 30, 2025
  • Rated: 4.9 |
  • Online Users: 610
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  • Question 1
    • Company Y plans to diversify into an activity where Company X has an equity beta of 1.6, a debt beta of zero
      and gearing of 50% (debt/debt plus equity).
      The risk-free rate of return is 5% and the market portfolio is expected to return 10%.
      The rate of corporate income tax is 30%.
      What would be the risk-adjusted cost of equity if Company Y has 60% equity and 40?bt?

      Answer: B
  • Question 2
    • A 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:


      29

      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?

      Answer: C
  • Question 3
    • M is an accountant who wishes to take out a forward rate agreement as a hedging instrument but the company treasurer has advised that a short-term interest rate future would be a better option. Which of the following is true of a short-term interest rate future?

      Answer: C
  • Question 4
    • A company has:
       • $6 million market value of equity
      • $4 million market value of debt
       • WACC of 11.04%
       • Corporate income tax rate of 20%
      According to Modigliani and Miller's theory of capital structure with tax, what is the ungeared cost of equity?

      Answer: A
  • Question 5
    • A company has:
       • 10 million $1 ordinary shares in issue
       • A current share price of $5.00 a share
       • A WACC of 15%
      The company holds $10 million in cash. No interest is earned on this cash.
      It will invest this in a project with an expected NPV of $4 million.
      In a semi-strong efficient stock market, which of the following is the most likely share price immediately after
      the announcement of the new investment?

      Answer: A
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