Free CIMA CIMAPRA19-F03-1 Exam Practice Questions
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Question No 1
On 31 October 20X3: • A company expected to agree a foreign currency transaction in January 20X4 for settlement on 31 March 20X4. • The company hedged the currency risk using a forward contract at nil cost for settlement on 31 March 20X4. • The transaction was correctly treated as a cash flow hedge in accordance with IAS 39 Financial Instruments: Recognition and Measurement. On 31 December 20X3, the financial year end, the fair value of the forward contract was $10,000 (asset). How should the increase in the fair value of the forward contract be treated within the financial statements for the year ended 31 December 20X3?
Question No 2
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:
Question No 3
A company has 6 million shares in issue. Each share has a market value of $4.00. $9 million is to be raised using a rights issue. Two directors disagree on the discount to be offered when the new shares are issued. • Director A proposes a discount of 25% • Director B proposes a discount of 30% Which THREE of the following statements are most likely to be correct?
Question No 4
A wholly equity financed company has the following objectives: 1. Increase in profit before interest and tax by at least 10% per year. 2. Maintain a dividend payout ratio of 40% of earnings per year. Relevant data: • There are 2 million shares in issue. • Profit before interest and tax in the last financial year was $5 million. • The corporate income tax rate is 30%. At the beginning of the current financial year, the company raised long term debt of $2 million at 10% interest each year. Calculate the dividend per share that will be announced this year assuming the company achieves its objective of increasing profit before interest and tax by 10%.
Question No 5
When valuing an unlisted company, a P/E ratio for a similar listed company may be used but adjustments to the P/E ratio may be necessary. Which THREE of the following factors would justify a reduction in the proxy p/e ratio before use?
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Total 391 Questions
About This CIMAPRA19-F03-1 Question Bank
This page has 391 free practice questions for the CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) exam, last refreshed on 6th Sep 2026. Answer each question, then reveal the correct choice to check your understanding before deciding whether to unlock the full question bank.
The demo above is a sample of the complete CIMAPRA19-F03-1 question set. The full bank includes the PDF, downloadable practice test, and online exam-engine formats listed above, with free updates included for the duration you choose.
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