Free F3 Exam Braindumps
F3 Financial Strategy Questions 129–136 (page: 18)

A listed company in a high growth industry, where innovation is a key driver of success has always operated a residual dividend policy, resulting in volatility in dividends due to periodic significant investments in research and development.
The company has recently come under pressure from some investors to change its dividend policy so that shareholders receive a consistent growing dividend. In addition, they suggested that the company should use more debt finance.   If the suggested change is made to the financial policies, which THREE of the following statements are true?

The Board of Directors of a small listed company engaged in exploration are currently considering the future dividend policy of the company. Exploration is considered a high-risk business and consequently the company has a low level of debt finance.
Forecasts indicate a period of profit fluctuation in the next few years as the company is planning to embark on a major capital investment project. Debt finance is unlikely to be available due to the project's high business risk.
Which THREE of the following are practical considerations when determining the company's dividend/retention policy? 

A company based in Country D, whose currency is the D$, has an objective of maintaining an operating profit margin of at least 10% each year. 
Relevant data:   
* The company makes sales to Country E whose currency is the E$. It also makes sales to Country F whose currency is the F$.    
* All purchases are from Country G whose currency is the G$.   
* The settlement of all transactions is in the currency of the customer or supplier.
Which of the following changes would be most likely to help the company achieve its objective?

The International Integrated Reporting Council (IIRC) was formed in August 2010 and brings together a cross-section of representatives from a wide variety of business sectors.
The primary purpose of the IIRC's framework is to help enable an organsation to communicate how it:

A company has in a 5% corporate bond in issue on which there are two loan covenants.   
* Interest cover must not fall below 3 times   
* Retained earnings for the year must not fall below $3.5 million The Company has 200 million shares in issue. The most recent dividend per share was $0.04. The Company intends increasing dividends by 10% next year.
Financial projections for next year are as follows:
Advise the Board of Directors which of the following will be the status of compliance with the loan covenants next year?

A company's Board of Directors is assessing the likely impact of financing future new projects using either equity or debt. The directors are uncertain of the effects on key variables.
Which THREE of the following statements are true?

A company is currently all-equity financed. The directors are planning to raise long term debt to finance a new project. The debt:equity ratio after the bond issue would be 30:60 based on estimated market values.
According to Modigliani and Miller's Theory of Capital Structure without tax, the company's cost of equity would:

A large, listed company in the food and household goods industry needs to raise $50 million for a period of up to 6 months. It has an excellent credit rating and there is almost no risk of the company defaulting on the borrowings. The company already has a commercial paper programme in place and has a good relationship with its bank.
Which of the following is likely to be the most cost effective method of borrowing the money?