Free CIMA CIMAPRO19-F03-1-ENG Exam Questions

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

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Total 305 Questions | Updated On: Apr 27, 2026

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Question 1

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:

A : crease the company's asset beta.

B : crease the company's equity beta.

C : crease shareholder wealth.

D : crease the market value of the company's equity.

Answer: C

Question 2

Company J is in negotiations to acquire Company K and believes it can turn around Company K's

performance to match its own.

The following information is available for the two companies:

Select the maximum price for each share that Company J should place on Company K during negotiations.

A : $1.7

B : $2.0

C : $3.0

D : $3.2

Answer: C

Question 3

Company X is based in Country A, whose currency is the A$.

It trades with customers in Country B, whose currency is the B$.

Company X aims to maintain its revenue from exports to Country B at 25% of total revenue.

Company A has the following forecast revenue:

The forecast revenue from Country B has assumed an exchange rate of A$1/B$2, that is A$1 = B$2.

If the B$ depreciates against the A$ by 10%, the ratio of revenue generated from Country B as a percentage of

total revenue will:

A : ll to 23.3%.

B : to 27.0%.

C : to 30.3%.

D : ll to 22.7%.

Answer: A

Question 4

A company is concerned that a high proportion of its debt portfolio consists of variable rate finance with an

interest rate of LIBOR ' 1 .0%.

It is considering using an interest rate swap to reduce interest rate risk out is concerned about additional

finance cost this might create.

A bank has quoted swap rates of 3% 3.5% against LIBOR.

Is an interest rate swap likely to be beneficial to the company at current LIBOR rates?

A : , because it would be cheaper to repay variable rate finance aid enter into new fixed rate finance than to enter into an interest rate swap

B : , because it will have lower interest rate risk and interest cost remains the same.

C : , because interest cost will decrease with the interest rate swap in place.

D : , because interest cost will increase with the interest rate swap in place.

Answer: B

Question 5

A company plans to acquire new machinery.

It has two financing options; buy outright using a bank loan, or a finance lease.

Which of the following is an advantage of a finance lease compared with a bank loan?

A : is "off-balance sheet" and will not affect the company's gearing.

B : interest rate offered might be more favourable because the lessor has the security of the asset.

C : x depreciation allowances may be passed on to the company by the lessor.

D : lessor provides maintenance of the asset.

Answer: B

Page: 1 / 61

Total 305 Questions | Updated On: Apr 27, 2026

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