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CIMA Strategic level F3 Syllabus Exam Questions Answers

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Question 56

Company Z has just completed the all-cash acquisition of Company A.

Both companies operate in the advertising industry.

The market considered the acquisition a positive strategic move by Company Z.

 

Which THREE of the following will the shareholders of Company Z expect the company's directors to prioritise following the acquisition?

Options:

A.

The realisation of anticipated post-acquisition synergies.

B.

The development of a dividend policy to meet the expectations of the target company shareholders.

C.

The integration and retention of key employees.

D.

The regulatory approval required to complete the acquisition.

E.

The retention of key customers of the acquired company.

Question 57

A manufacturing company based in Country R. where the currency is the R$, has an objective of maintaining an operating profit margin of at least 10% each year

Relevant data:

• The company makes sales to Country S whose currency is the SS It also makes sales to Country T whose currency is the T$ " All purchases are from Country U whose currency is the US.

• The settlement of an transactions is in the currency of the customer or supplier

Which of the following changes would be most likely to help the company achieve its objective?

Options:

A.

The T$ weakens against the R$ over time

B.

The R$ strengthens against the S$ over time.

C.

The R$ strengthens against the U$ over time.

D.

The R$ weakens against the U$ over time

Question 58

XYZ is a multi-national group with subsidiary AA in Country A and subsidiary BB in Country B. The capital structures of AA and BB are set up to take advantage of the lower tax rate in Country A Thin capitalisation rules in Country B will limit the ability for either AA or BB to claim tax relief on:

Options:

A.

interest earned by BB.

B.

interest earned by AA

C.

interest paid by BB

D.

interest paid by AA

Question 59

An unlisted company.

• Is owned by the original founders and members of their families

• Pays annual dividends each year depending on the cash requirements of the dominant shareholders.

• Has earnings that are highly sensitive to underlying economic conditions.

• Is a small business in a large Industry where there are listed companies with comparable capital structures

Which of the following methods is likely to give the most accurate equity value for this unlisted company?

Options:

A.

Dividend valuation model.

B.

Net asset valuation

C.

P/E based valuation using the P/E of a similar company.

D.

Discounted cash flow analysis at WACC (based on cash flows after tax but before financing) plus the market value of debt.

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Exam Code: F3
Exam Name: Financial Strategy
Last Update: Nov 21, 2024
Questions: 435
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