CIMA F3 Exam With Confidence Using Practice Dumps

6.0% p.a.The company:Borrows from bank P at Libor + 3%Enters a swap with bank Q: pay fixed 4.5%, receive Libor + 1.5%Combine the cash flows:Pay Libor + 3% (loan)Pay 4.5% (swap fixed leg)Receive Libor + 1.5% (swap floating leg)Net cost:(Libor+3%)+4.5%−(Libor+1.5%)=3%+4.5%−1.5%=6.0%(\text{Libor} + 3\%) + 4.5\% - (\text{Libor} + 1.5\%) = 3\% + 4.5\% - 1.5\% = 6.0\%(Libor+3%)+4.5%−(Libor+1.5%)=3%+4.5%−1.5%=6.0% So the hedged borrowing rate is:

6.0% p.a.

2200Current wealth = 1,000 shares × $2.20 = $2,200.With a 1-for-10 scrip dividend, the investor receives:1,000 ÷ 10 = 100 new shares → total = 1,100 shares.With a scrip dividend, no cash leaves the company — total company value is spread over more shares. Theoretical new share price:New price=2.20×1011=2.00\text{New price} = 2.20 \times \frac{10}{11} = 2.00New price=2.20×1110​=2.00 Shareholder wealth after scrip:1,100×2.00=$2,2001,100 \times 2.00 = \$2,2001,100×2.00=$2,200 So total wealth is unchanged at $2,200.