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100+ Free CIMA F3 Practice Questions

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A company is comparing a management buy-out (MBO) with a trade sale of a subsidiary. Which statement about an MBO is correct?

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ArticleCIMA 2026: Portfolio Construction and Consulting Prep7 min read
2026 Statistics

Key Facts: CIMA F3 Exam

60

Objective-Test Questions

CIMA Strategic Level Blueprint 2026-2027

90 min

Exam Duration

CIMA Strategic Level Blueprint 2026-2027

100/150

Scaled Pass Mark

AICPA & CIMA

30%

Business Valuation and M&A Weighting

CIMA Strategic Level Blueprint 2026-2027

On demand

Pearson VUE Booking

AICPA & CIMA

CIMA F3 Financial Strategy is sat as an on-demand computer-based objective test at Pearson VUE with roughly 60 questions in 90 minutes, using multiple-choice, multiple-response, number-entry and drag-and-drop items. The 2026-2027 Strategic-level blueprint distributes the syllabus across four areas: financial policy decisions (about 15%), sources of long-term funds (about 30%), financial risk (about 25%), and business valuation and acquisitions and mergers (about 30%). Every CIMA objective test uses a scaled pass mark of 100 out of 150. The exam is highly computational, covering WACC, CAPM, Modigliani-Miller, hedging instruments and valuation methods.

Sample CIMA F3 Practice Questions

Try these sample questions to test your CIMA F3 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A listed company is setting its financial objectives. Which of the following is generally regarded as the primary financial objective for a stock-market-listed company under CIMA F3 financial strategy?
A.Maximisation of shareholder wealth
B.Maximisation of annual accounting profit
C.Maximisation of market share
D.Minimisation of the corporation tax charge
Explanation: F3 treats maximisation of shareholder wealth (reflected in share price and dividends) as the primary financial objective of a listed company. Profit, market share and tax are subordinate or constrained objectives, not the overarching financial goal.
2A company wishes to set a financial objective expressed as a target. Which of the following is an example of a financial objective rather than a non-financial objective?
A.Achieve carbon-neutral operations by 2030
B.Achieve a target earnings per share growth of 8% per year
C.Become the employer of choice in the sector
D.Improve customer satisfaction scores
Explanation: A target EPS growth rate is a financial objective because it is expressed in monetary/financial-statement terms. The other items are non-financial objectives relating to environment, people and customers.
3A company has three interdependent financial strategy decisions to make. Which set correctly lists the three key decisions covered by financial strategy?
A.Hiring, training and reward decisions
B.Pricing, marketing and distribution decisions
C.Investment, financing and dividend decisions
D.Production, procurement and logistics decisions
Explanation: Financial strategy concerns the three interrelated decisions of investment (what assets/projects), financing (how to fund them) and dividend (how much to return to shareholders). These decisions interact and must be consistent.
4A government imposes corporation tax at 25% with tax relief on debt interest. Holding all else equal, what is the most direct financial-strategy effect of this tax relief on a company's choice of financing?
A.It increases the cost of debt above the cost of equity
B.It creates an incentive to issue more equity because dividends become deductible
C.It has no effect on the cost of capital
D.It creates an incentive to use more debt because interest is tax-deductible
Explanation: Because debt interest is tax-deductible, debt has a tax shield that lowers its effective after-tax cost, encouraging companies to use more debt (a key Modigliani-Miller with-tax insight). Dividends are not tax-deductible.
5Under CIMA F3, which stakeholder mapping framework classifies stakeholders by the level of power they hold and the degree of interest they have, guiding how a company manages them?
A.Mendelow's power-interest matrix
B.Porter's five forces
C.The Ansoff matrix
D.The BCG growth-share matrix
Explanation: Mendelow's matrix maps stakeholders on power against interest, producing categories such as 'key players' (high power, high interest) who must be managed closely. It is the standard stakeholder-management tool referenced in F3 financial policy.
6A company with steady, mature cash flows and few positive-NPV investment opportunities is reviewing its dividend policy. According to residual and signalling theory, what dividend approach is most consistent with maximising shareholder wealth?
A.Retain all earnings to fund future growth
B.Pay out a high proportion of earnings as dividends because surplus cash cannot be reinvested profitably
C.Pay no dividend and rely solely on capital gains
D.Borrow heavily to fund a special dividend each year
Explanation: Under residual theory, a mature company lacking positive-NPV projects should return surplus cash to shareholders rather than retain it at sub-optimal returns. High, stable payouts also signal confidence and suit income-seeking shareholders.
7A company is considering a scrip (stock) dividend instead of a cash dividend. Which statement about a scrip dividend is correct?
A.It reduces the total number of shares in issue
B.It increases the company's cash balance immediately
C.It conserves cash by issuing additional shares to shareholders instead of paying cash
D.It is treated identically to a share buyback
Explanation: A scrip dividend gives shareholders extra shares rather than cash, conserving the company's cash. It increases the number of shares in issue but does not change total equity value at the moment of issue.
8A company's directors argue that dividend policy is irrelevant to firm value in a perfect capital market. This view is most closely associated with which theory?
A.The clientele effect
B.The bird-in-the-hand argument
C.Agency theory
D.Modigliani and Miller's dividend irrelevance theory
Explanation: Modigliani and Miller argued that in a perfect market with no taxes or transaction costs, dividend policy does not affect firm value because shareholders can create 'home-made dividends'. The other items argue dividends do matter.
9An entity is assessing environmental, social and governance (ESG) factors within its financial strategy. Which of the following best describes why integrating ESG can support long-term shareholder value?
A.It can reduce risk, lower the cost of capital and protect reputation, supporting sustainable cash flows
B.It guarantees an immediate increase in next year's profit
C.It removes the need to comply with financial reporting standards
D.It eliminates all financial risk from operations
Explanation: Strong ESG practices can reduce regulatory, reputational and operational risk, attract ESG-conscious investors and lower the cost of capital, supporting durable cash flows and value. ESG does not guarantee short-term profit or remove risk entirely.
10A company set a target to maintain interest cover of at least 4 times. Profit before interest and tax is 8.0m and interest payable is 1.6m. By how much, if any, is the company above or below its target interest cover?
A.Interest cover is 4.0 times, exactly meeting the target
B.Interest cover is 5.0 times, which is above the target
C.Interest cover is 3.2 times, which is below the target
D.Interest cover is 12.8 times, which is above the target
Explanation: Interest cover = PBIT / interest = 8.0 / 1.6 = 5.0 times, which exceeds the 4-times target, indicating comfortable ability to service debt interest.

About the CIMA F3 Exam

CIMA F3 Financial Strategy is the finance subject of the CIMA Strategic level. Its on-demand objective test has about 60 questions in 90 minutes covering financial policy decisions, sources of long-term funds, financial risk, and business valuation and acquisitions and mergers.

Questions

60 scored questions

Time Limit

90 minutes

Passing Score

Scaled score of 100 out of 150

Exam Fee

Set by AICPA & CIMA and varies by region and student status; check the current CIMA fee schedule (AICPA & CIMA / Pearson VUE)

CIMA F3 Exam Content Outline

15%

Financial policy decisions

Formulating financial strategy, financial objectives, the investment-financing-dividend decisions, stakeholders, taxation, regulation, ESG factors and dividend policy.

30%

Sources of long-term funds

Equity and debt finance, rights issues, convertibles, leasing, cost of equity and debt, CAPM, WACC, Modigliani-Miller, capital structure and gearing.

25%

Financial risk

Currency, interest-rate and counterparty risk, transaction and translation exposure, forwards, futures, options, swaps, FRAs, money-market hedges, parity theories and VaR.

30%

Business valuation and acquisitions and mergers

Asset, earnings, dividend and DCF valuation methods, synergies, financing a bid, pricing, post-transaction value, restructuring, demergers, MBOs and reconstructions.

How to Pass the CIMA F3 Exam

What You Need to Know

  • Passing score: Scaled score of 100 out of 150
  • Exam length: 60 questions
  • Time limit: 90 minutes
  • Exam fee: Set by AICPA & CIMA and varies by region and student status; check the current CIMA fee schedule

Keys to Passing

  • Complete 500+ practice questions
  • Score 80%+ consistently before scheduling
  • Focus on highest-weighted sections
  • Use our AI tutor for tough concepts

CIMA F3 Study Tips from Top Performers

1Allocate study time using the four blueprint weightings, giving sources of long-term funds and business valuation the most attention.
2Memorise and practise the core formulae: WACC, CAPM, gearing/ungearing betas, dividend valuation model, TERP and Modigliani-Miller.
3Drill timed number-entry questions, because partial marks are not awarded and every element must be correct.
4Work through plenty of valuation and M&A scenarios, since this area carries the largest single weighting.
5Practise hedging questions across forwards, futures, options, swaps, FRAs and money-market hedges until the choice of instrument is automatic.
6Use the on-screen calculator and formulae sheet under timed conditions so the real exam interface feels familiar.

Frequently Asked Questions

How many questions are on the CIMA F3 exam?

The CIMA F3 Financial Strategy objective test has approximately 60 questions to be completed in 90 minutes. Item types include multiple-choice, multiple-response, number-entry (fill-in-the-blank) and drag-and-drop.

What is the CIMA F3 pass mark?

Like every CIMA objective test, F3 is marked on a scaled score out of 150, and candidates need a scaled score of at least 100 to pass. The scaled score is not a simple percentage of questions correct.

What are the CIMA F3 syllabus weightings for 2026-2027?

The 2026-2027 Strategic-level blueprint splits F3 into financial policy decisions (about 15%), sources of long-term funds (about 30%), financial risk (about 25%), and business valuation and acquisitions and mergers (about 30%).

Where do I sit the CIMA F3 exam?

CIMA F3 is an on-demand objective test booked through Pearson VUE. Candidates can sit it at a Pearson VUE test centre or, where available, via online proctored delivery, year-round rather than in fixed sittings.

Is CIMA F3 a calculation-heavy exam?

Yes. F3 is one of the more computational CIMA papers, testing WACC, CAPM, gearing and ungearing betas, Modigliani-Miller, rights-issue and TERP calculations, hedging instruments and several business-valuation methods.

What do I need before sitting CIMA F3?

F3 is a Strategic-level subject, so candidates are expected to have completed the CIMA Management level, including E2, P2, F2 and the Management Case Study, before attempting the Strategic-level objective tests.