Free CIMA CIMAPRO19-F03-1-ENG Exam Questions

Become CIMA Certified with updated CIMAPRO19-F03-1-ENG exam questions and correct answers

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Total 305 Questions | Updated On: Nov 11, 2024

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Question 1

Company X is based in Country A, whose currency is the A$.

It trades with customers in Country B, whose currency is the B$.

Company X aims to maintain its revenue from exports to Country B at 25% of total revenue.

Company A has the following forecast revenue:

The forecast revenue from Country B has assumed an exchange rate of A$1/B$2, that is A$1 = B$2.

If the B$ depreciates against the A$ by 10%, the ratio of revenue generated from Country B as a percentage of

total revenue will:

A : ll to 23.3%.

B : to 27.0%.

C : to 30.3%.

D : ll to 22.7%.

Answer: A

Question 2

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?

A : can be tailored to the exact reeds of the company.

B : interest rates have gone down the price of the future will have fallen.

C : must be kept for ne whole duration of the contract

D : date is flexible and the position can be closed quickly and easily.

Answer: C

Question 3

A company is planning to issue a 5 year $100 million bond at a fixed rate of 6%.

It is also considering whether or not to enter into a 10 year $100 million swap to receive 5% fixed and pay

Libor + 1% once a year.

The company predicts that Libor will be 4% over the life of the 5 years.

What is the impact of the swap on the company's annual interest cost assuming that

the Libor prediction is correct?

A : crease by 1%.

B : ll by 1%.

C : main the same.

D : ll by 2%.

Answer: C

Question 4

A listed company in a high growth industry, where innovation is a key driver of success has always operated a

residual dividend policy, resulting in volatility in dividends due to periodic significant investments in research

and development.

The company has recently come under pressure from some investors to change its dividend policy so that

shareholders receive a consistent growing dividend. In addition, they suggested that the company should use

more debt finance.

If the suggested change is made to the financial policies, which THREE of the following statements are true?

A : may give a signal to the market that the company is entering a period of stable growth.

B : ere may be a change to the shareholder profile due to 'the clientele effect'.

C : directors will not have to take shareholder dividend preferences into consideration in future.

D : tained earnings have a lower cost than debt finance.

E : company's financial risk will increase due to its increased use of debt finance.

Answer: A,B

Question 5

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:

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?

A : tained earnings

B : ivate placement of a bond

C : ghts issue

D : nk overdraft

Answer: C

Page: 1 / 61

Total 305 Questions | Updated On: Nov 11, 2024

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