Free CIMA CIMAPRO19-F03-1-ENG Exam Practice Questions 2026

Stay ahead with 100% Free F3 Financial Strategy CIMAPRO19-F03-1-ENG Practice Test Questions Dumps

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Total 305 Questions | Updated On: May 23, 2026

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Question 1

A company plans to acquire new machinery.

It has two financing options; buy outright using a bank loan, or a finance lease.

Which of the following is an advantage of a finance lease compared with a bank loan?

A : It is "off-balance sheet" and will not affect the company's gearing.

B : The interest rate offered might be more favourable because the lessor has the security of the asset.

C : Tax depreciation allowances may be passed on to the company by the lessor.

D : The lessor provides maintenance of the asset.

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:

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 : Retained earnings

B : Private placement of a bond

C : Rights issue

D : Bank overdraft

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 : Increase by 1%.

B : Fall by 1%.

C : Remain the same.

D : Fall by 2%.

Answer: C

Question 4

Company A is planning to acquire Company B at a price of $ 65 million by means of a cash bid.

Company A is confident that the merged entity can achieve the same price earnings ratio as that of Company

What does Company A expect the value of the merged entity to be post acquisition?

A : $122.5 million

B : $156.0 million

C : $187.5 million

D : $207.0 million

Answer: A

Question 5

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

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

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

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

Answer: C

Page: 1 / 61

Total 305 Questions | Updated On: May 23, 2026

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