Free Practice CIMA CIMAPRO19-F03-1-ENG Exam Questions 2025

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

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Total 305 Questions | Updated On: Apr 24, 2025

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Question 1

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?

A : 12.00%

B : 10.16%

C : 16.24%

D : 12.54%

Answer: A

Question 2

A company is preparing an integrated report according to the International <IR> Framework as issued by the

International Integrated Reporting Council.

Which THREE of the following should be included in the report?

A : An explanation of how the organisation's governance structure supports its ability to create value in the short, medium and long term.

B : A detailed analysis of the organisation's business model.

C : The challenges and uncertainties that the organisation is likely to encounter in pursuing its strategy.

D : A comparison of the key elements of its financial statements with those of its main competitor.

E : A summary of the key issues discussed by directors in main board meetings.

Answer: A,B,C

Question 3

A company is funded by:

• $40 million of debt (market value)

• $60 million of equity (market value)

The company plans to:

• Issue a bond and use the funds raised to buy back shares at their current market value.

• Structure the deal so that the market value of debt becomes equal to the market value of equity.

According to Modigliani and Miller's theory with tax and assuming a corporate income tax rate of 20%, this

plan would:

A : increase the company's asset beta.

B : decrease the company's equity beta.

C : increase shareholder wealth.

D : increase the market value of the company's equity.

Answer: C

Question 4

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?

A : $5.40

B : $6.40

C : $6.80

D : $5.30

Answer: A

Question 5

Company J is in negotiations to acquire Company K and believes it can turn around Company K's

performance to match its own.

The following information is available for the two companies:

Select the maximum price for each share that Company J should place on Company K during negotiations.

A : $1.7

B : $2.0

C : $3.0

D : $3.2

Answer: C

Page: 1 / 61

Total 305 Questions | Updated On: Apr 24, 2025

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