CIMA CIMAPRA19-P03-1-ENG P3 Risk Management (Online) Online Training
CIMA CIMAPRA19-P03-1-ENG Online Training
The questions for CIMAPRA19-P03-1-ENG were last updated at Nov 19,2024.
- Exam Code: CIMAPRA19-P03-1-ENG
- Exam Name: P3 Risk Management (Online)
- Certification Provider: CIMA
- Latest update: Nov 19,2024
A Firewall is an element of a company’s Information Technology infrastructure.
Which THREE of the following are characteristics of a Firewall?
- A . A Firewall determines the boundary of the "Trusted" components of the company’s Information Technology infrastructure.
- B . A Firewall protects sensitive data against accidental or malicious damage.
- C . A Firewall protects the computer suite against physical attack.
- D . A Firewall protects against unauthorised network access.
- E . A Firewall protects against viruses.
- F . A Firewall can screen every message coming into or out of the company network looking for key words, or attachments.
In the purchasing department, the purchasing manager selects and approves all suppliers, as they are the only person with sufficient experience to do so. They use a very limited number of suppliers because they can rely on these suppliers to provide goods of the quality required at a competitive price. They do not keep any documents in relation to negotiations with other potential suppliers or other quotes obtained.
In relation to the above, which of the following statements are valid?
- A . The fact that the purchasing manager uses a very small number of suppliers is, in itself, a sign of poor internal controls.
- B . It is acceptable for clerks in the trade receivables section to make journal adjustments without authorisation provided the amounts involved are not material to U’s financial statements.
- C . It is acceptable for clerks in the trade receivable section to make journal adjustments without authorisation, provided they have no access to cash receipts.
- D . The fact that the purchasing manager does not keep documentation relating to negotiations with suppliers, or potential suppliers, is evidence that they are involved in fraudulent activity.
- E . Clerks making journal adjustments without reference to their supervisor is evidence of inadequate separation of duties.
- F . The way the role of purchasing manager is carried out in U increases the chance that the company will fall victim to fraudulent activity.
K has several subsidiary companies. The directors of K’s subsidiaries are paid an annual b onus based upon their particular subsidiary’s reported profits.
The directors of one of K’s subsidiaries are considering the choice between two models of a machine.
Which of the following is most likely to explain the decision to choose model X over model Y?
- A . Model X has a better combination of investment and running costs.
- B . Model X is the less risky investment.
- C . Investing in model X will mean the subsidiary will show a higher profit.
- D . Investing in model X will lead to a higher share price.
DRAG DROP
Z is a multinational pharmaceuticals company with operations across Europe, America and Asia.
It is currently investigating the possibility of setting up a chemical and specialist production facility in South America. This would be a multi $billion investment.
What steps should Z take to manage the following risks in this long term venture.
VBN’s home currency is the V$. On 1 January, VBN must make a payment of C$2 million on 31 March of that same year.
On 1 January the spot exchange rate was V$1 = C$0.4.
On 1 January VBN paid $180,000 for a call option to buy C$2 million for V$5.5 million on 31 March. VBN’s cost of borrowing was 8% per year.
On 31 March the spot rate was V$1 = C$0.45.
What was the total cost, including the cost of the option, of settling the payable?
- A . V$4.628 million
- B . V$5.684 million
- C . V$4.444 million
- D . V$5.5 million
DFG’s home currency is the D$.
DFG is heavily exposed to the exchange rate between the D$ and the L$, country L’s currency.
DFG’s treasurer has noted the following:
• Inflation has been running at 5% in DFG’s home country and 8% in country L
• Interest rates are 7% in DFG’s home country and 11% in country L
• The spot rate is D$1.0000 = L$2.1000 and the three month forward rate is D$1.0 = L$2.1196
Which of the following statements is consistent with these figures?
- A . Interest rates are expected to continue unchanged, but country L’s inflation rate will increase in proportion to the inflation rate in DFG’s home country.
- B . Interest rates are expected to continue unchanged, but country L’s inflation rate will decrease in proportion to the inflation rate in DFG’s home country.
- C . Country L’s interest rate is expected to decline relative to that of DFG’s home country and inflation rates are expected to continue unchanged.
- D . Country L’s interest rate is expected to increase relative to that of DFG’s home country and inflation rates are expected to continue unchanged.
MNB is a multinational IT company with headquarters in Asia and with operations in all continents.
MNB is attempting to expand its operations in Europe. This is seen as a major challenge as the European market is very well developed and highly competitive.
MNB develops and manufactures its own products. Parts and assemblies are sourced across Asia, America and Europe. These are sometimes purchased locally as a condition of a contract, but MNB aims to include as much of its own equipment as possible. Transfer prices between MNB’s subsidiaries can be set in YEN, USD, EURO, GBP. Transfer prices are revised every month in line with production times as most goods are made on short order with sales cycles running at 3-4 months.
What types of risk are being presented here?
- A . Political risk
- B . Currency risk
- C . Economic risk
- D . Environmental risk
- E . Fraud risk
- F . Legal risk
Which of the following summarises Purchasing Power Parity Theory (PPPT)?
- A . Government intervention cannot affect the inevitable rise or fall of its currency in the short-term.
- B . The difference between the spot and the forward exchange rates is equal to the differential between the inflation rates in the two countries.
- C . PPPT predicts that the country with the lower inflation rate will see the currency devalue accordingly.
- D . The difference between the interest rates in the two countries is equal to the differential between the spot and the forward exchange rate for the currency in the two countries.
A project has a net present value of $2 million.
Total cash outflows of this project have a present value of $14 million, which includes staff costs of $10 million.
What is the project’s sensitivity to staff costs?
- A . 20%
- B . 63%
- C . 71%
- D . 14%
GHY is a listed company. Tom is GHY’s CEO and Peter is its non-executive Chair of the Board. Tom and Peter both have substantial relevant business and industrial experience and both are believed to have considerable integrity. Tom and Peter quickly developed a good working relationship after Peter’s appointment. They have become close friends.
Tom briefs Peter on every aspect of the business. Tom and Peter jointly agree the agenda for every board meeting and both agree on the manner in which matters will be presented to the board.
Taking account of the principles of good corporate governance, which of the following statements is correct?
- A . It is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company.
- B . Non-contentious board meetings show how well Tom and Peter are running the company and shows that the management is cohesive.
- C . The relationship between Peter and Tom may have a detrimental effect on company decision making as the Board is not always being informed about matters in an unbiased manner.
- D . Since the non-executive chair clearly has a significant role within this company there is little danger that any individual will become excessively dominant.
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