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CIMA F3 Exam With Confidence Using Practice Dumps

Exam Code:
F3
Exam Name:
Financial Strategy
Certification:
Vendor:
Questions:
393
Last Updated:
May 12, 2026
Exam Status:
Stable
CIMA F3

F3: CIMA Strategic Exam 2025 Study Guide Pdf and Test Engine

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Financial Strategy Questions and Answers

Question 1

A company has accumulated a significant amount of excess cash which is not required for investment for the foreseeable future.

It is currently on deposit, earning negligible returns.

 

The Board of Directors is considering returning this excess cash to shareholders using a share repurchase programme.

The majority of shareholders are individuals with small shareholdings.

 

Which THREE of the following are advantages of the company undertaking a share repurchase programme? 

Options:

A.

Individual shareholders can realise their investment if they wish.

B.

The earnings per share should increase for the shareholders who do not sell their shares.

C.

It reduces excess cash which might have been attractive to predators.

D.

It reduces the amount of cash for potential future investment opportunities. 

E.

Institutional investors generally prefer a constant predictable income in the form of dividends.

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Question 2

The table below shows the forecast for a company's next financial year:

 

 

The forecast incorporates the following assumptions:

   • 25% of operating costs are variable

   • Debt finance comprises a $400 million fixed rate loan at 5%

   • Corporate income tax is paid at 25%

 

The company plans to do the following next year from the forecast earnings on the assumption that earnings will be equivalent to free cash flow: 

   • Pay a total dividend of $20 million

   • Invest $40 million in new projects

 

What is the maximum % reduction in operating activity that could occur next year before the company's dividend and investment plans are affected?

 

Give your answer to the nearest 0.1%.

 

   

Options:

Question 3

Company A is located in Country A, where the currency is the A$.

It is listed on the local stock market which was set up 10 years ago.

It plans a takeover of Company B, which is located in Country B where the currency is the B$, and where the stock market has been operating for over 100 years.

Company A is considering how to finance the acquisition, and how the shareholders of Company B might respond to a share exchange or cash (paid in B$).

 

Which of the following is likely to explain why the shareholders of Company B would prefer a share exchange as opposed to a cash offer?

Options:

A.

It would allow them to realise their investment and make a capital gain.

B.

It would avoid them being exposed to foreign currency risk.

C.

They would receive shares in a market that is likely to be more efficient.

D.

It would enable them to benefit from the future performance of the combined entity.