Free CIMA CIMAPRO19-F03-1-ENG Exam Questions

Become CIMA Certified with updated CIMAPRO19-F03-1-ENG exam questions and correct answers

Page: 1 / 61

Total 305 Questions | Updated On: Jun 17, 2026

Add To Cart

Question 1

An entity prepares financial statements to 31 December each year. The following data applies:

1 December 20X0

• The entity purchased some inventory for $400,000.

• In order to protect the inventory against adverse changes in fair value the entity entered into a futures

contract to sell the inventory for a fixed price on 31 January 20X1.

• The entity designated this contract as a fair value hedge of the value of the inventory.

31 December 20X0

• The inventory had a fair value of $480,000 and the futures contract had a fair value of $75,000 (a financial

liability).

What will be the impact on the statement of profit or loss and other comprehensive income for the year ended

31 December 20X0 in respect of the change in the value of the inventory and the futures contract?

A : loss of $75,000 will be recognised in profit or loss.

B : loss of $75,000 will be recognised in other comprehensive income.

C : net gain of $5,000 will be recognised in profit or loss.

D : net gain of $5,000 will be recognised in other comprehensive income.

Answer: C

Question 2

A listed company is financed by debt and equity.

If it increases the proportion of debt in its capital structure it would be in danger of breaching a debt covenant

imposed by one of its lenders.

The following data is relevant:

The company now requires $800 million additional funding for a major expansion programme.

Which of the following is the most appropriate as a source of finance for this expansion programme?

A : tained earnings

B : ivate placement of a bond

C : ghts issue

D : nk overdraft

Answer: C

Question 3

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

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

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

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

Answer: C

Question 4

Company Y plans to diversify into an activity where Company X has an equity beta of 1.6, a debt beta of zero

and gearing of 50% (debt/debt plus equity).

The risk-free rate of return is 5% and the market portfolio is expected to return 10%.

The rate of corporate income tax is 30%.

What would be the risk-adjusted cost of equity if Company Y has 60% equity and 40?bt?

A : 11.6%

B : 11.9%

C : 9.1%

D : 13%

Answer: B

Question 5

A company financed by equity and debt can be valued by discounting:

A : ee cash flow before interest at WACC.

B : ee cash flow before interest at the cost of equity.

C : ee cash flow after interest at WACC.

D : ee cash flow after interest at the cost of equity.

Answer: A

Page: 1 / 61

Total 305 Questions | Updated On: Jun 17, 2026

Add To Cart