Practice CIMAPRO19-F03-1-ENG Exam Online

Question 1

Company A needs to raise AS500 mi lion to invest in a new project and is considering using a pub ic issue of

bonds to finance the investment.

Which THREE of the following statements-relating to this bond issue are true?

A : A company must be listed before it can issue bones.

B : The largest issuer of bond i3 the government.

C : Purchasing bonds in the capital markets enables entities to borrow large amounts of finance.

D : The bond market is unregulated making it easier to raise finance

E : Bonds issues in the corporate debt market are underwritten.

Answer: A,B,C

Question 2

Z wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate

it pays. Z can borrow floating at Libor ' 1, and fixed at 10%.

Which of the following companies would be the most appropriate for Z to enter into a swap with?

A : Company A - it can borrow floating L +1 ½ and fixed at 9.5%

B : Company D - it can borrow at L +1 ½ and fixed at 10.5%

C : Company C - it can borrow at L +1 ½ and fixed at 9%

D : Company E - it can borrow floating at L +1 ½ and fixed at 12%

Answer: C

Question 3

The Treasurer of Z intends to use interest rate options to set an interest rate cap on Z’s borrowings. Which of the following statement is correct?

A : The Treasurer should buy an interested rate floor and sell an interested cap ta the same time

B : The Treasurer will retain the benefit of movcTcnt3 in interest ratc3 below the floor limit.

C : The cost of a collar is lower than the cost of a cap a one.

D : The Treasurer will have to negotiate the options with Z-s Dark

Answer: C

Question 4

The Board of Directors of a listed company is considering the company's dividend/retentions policy.

The inflation rate in the economy is currently high and is expected to remain so for the foreseeable future.

The board are unsure what impact the high level of inflation might have on the dividend policy.

Which THREE of the following statements are true?

A : The high inflation rate does not need to be considered when determining the dividend policy.

B : Consideration should be given to the fact that shareholders will have a desire for real growth in dividend.

C : Retained earnings for reinvestment will have to earn a return in excess of the inflation level.

D : The impact of inflation on the cash flows should be considered when formulating the dividend policy.

E : In periods of high inflation 100% of earnings should always be paid out as dividends so that shareholders can protect their wealth against the impact of inflation.

Answer: B,C,D

Question 5

The directors of a financial services company need to calculate a valuation of their company’s equity in

preparation for an upcoming initial Public Offering (IPO) of shares. At a recent board meeting they discussed

the various methods of business valuation.

The Chief Executive suggested using a Price-earing (P./E) method of valuation, but the finance Director

argued that a valuation based on forecast cash flows to equity would be more appropriate.

Which THREE of the following are advantages of valuation based on forecast cash flows to equity, compared

to a valuating using a price earnings methods?

A : Using cash is theoretically superior to using profits in a valuation calculation.

B : It give on estimate of the likely shareholder value that will be created.

C : The calculations are much simpler.

D : It incorporates the time value of money.

E : It avoids the problem of having to forecast a sustainable level of future growth.

Answer: A,C,D

Name:	F3 Financial Strategy
Exam Code:	CIMAPRO19-F03-1-ENG
Certification:	CIMA Professional Qualification
Vendor:	CIMA
Total Questions:	305
Last Updated:	Aug 01, 2026

CIMA CIMAPRO19-F03-1-ENG Answers