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
JC is a car manufacturing company in country C and manufactures diesel cars It is facing a number of serious risks .
Which TWO of the following nsk factors are external?
- A . JC’s marketing director is considering an attractive job offer from one of J’s main competitors
- B . Country F, JC’s main market, is threatening to impose tariffs on car imports
- C . JC is facing court action arising from injuries to customers caused by an alleged brake failure in one of its cars
- D . Diesel cars are being criticised by experts because it is believed they cause more harmful pollution than petrol
- E . JC’s production staff are complaining that their wages are too low compared to wages paid to other employees.
Company M has lost 25% of its revenue in the last three months due to bad debts. One of the receivables written off was from a long standing customer and the other three were from new customers. The management accountant has warned the sales team that the company cannot survive any more substantial bad debts.
Which of the following internal controls should be put in place to try and prevent further bad debts?
- A . A credit check should be carried out on each new customer.
- B . Credit limits should be set for all customers. However, if the credit limit will cost a sale then sales staff can override this limit.
- C . Two sales staff must authorise new customers and sign a form stating that they have done so.
- D . An aged analysis of customer balances must be reviewed every month.
- E . As soon as a customer payment is overdue they should not be allowed to purchase more until their balance has been reduced.
T is an accountant who has been accused of professional incompetence T agreed to advise a client on currency management and the client lost a great deal of money when a large foreign currency trade receivable declined in value without having been hedged.
Which of the following factors strengthens the case that T has been incompetent? Select ALL that apply
- A . T had been too busy to stay up to date with continuing professional development requirements
- B . Since the loss the client’s chief executive has spoken to her business contacts m the industry and all had hedged against a decline in this currency
- C . T had studied all relevant economic forecasts and had concluded that it would be too expensive to hedge this receivable
- D . T had offered the client two alternatives showing the costs and benefits of hedging the position, but did not strongly recommend either alternative
- E . T had never offered advice on foreign currency management before
DFR is an online retailer that sells picture frames The software running on DFR’s website enables customers to log in and make purchases by inputting an email address as a user name and a password that must contain at least eight characters, including upper and lower case letters, numbers and punctuation marks (e.g. £, $ or!) Once logged in, customers can check previous orders that they have placed.
Customers can also use DFR’s website to change personal details, including credit card numbers and delivery addresses Whenever they wish to use those facilities, the software sends a text message containing a six-digit number to their mobile phones They must input that number before the system will accept changes to their personal details
Which TWO of the following statements are correct?
- A . It is illogical to have different security measures in place for orders and for access to personal details.
- B . The software treats customers’ personal details as being more sensitive than their ordering histories
- C . The arrangement with the text message will have no effect on the security associated with changing personal details
- D . Customers should be able to update the mobile phone numbers in their DFR accounts using only their email addresses and passwords for access
- E . The software should never show the whole of a customer’s credit card number on screen, even if the customer has logged in and input the six-digit number.
CORRECT TEXT
A project has an NPV of £1,200,000. The present value of material costs which are included in the NPV calculation are £8,000,000.
What is the sensitivity of the project to changes in material costs? Give your answer to the nearest whole percentage.
The treasurer of IOK is considering entering into a money market hedge in order to hedge a payable.
Which of the following might be valid explanations for the use of a money market hedge for this purpose?
- A . There are no forward contracts available for the purchase of the payable currency using IOK’s home currency.
- B . The timing of the payable does not permit the use of a forward contract.
- C . The relevant currency markets are very thinly traded and the treasurer believes that forward contracts are mispriced.
- D . A money market hedge is easier and less expensive to organise than a future or forward contract.
- E . Money market hedges can be unwound whereas positions in derivatives cannot.
DFG’s call centre budgets four minutes for its operators to deal with a customer’s enquiry and conclude the call. Team leaders are evaluated on the basis of the average call length.
Simone is a team leader. Her team’s average call length is five minutes and 30 seconds. Simone accepts full responsibility. She encourages her team members to check that the customer is satisfied before concluding the call.
On investigation, it was discovered that 2% of the customers who dealt with Simone’s team had to call DFG again within seven days. Other teams had an average of 25% of customers call back within seven days because their first call had not fully resolved their problem.
Which of the following statements are true?
- A . The use of average call length may be leading to dysfunctional behaviour.
- B . Simone is in breach of call centre policy.
- C . It would be better to evaluate team leaders on the basis of multiple criteria.
- D . Team leaders should be responsible for setting policy on performance measurement within the call centre.
- E . Average call length should be replaced with the average rate of return calls as the primary performance measure for team leaders.
DRAG DROP
Identify, from the list provided, which category of business risk most accurately describes the events detailed below.
A UK manufacturing company has simultaneously:
• purchased a put option to sell USD 1million at an exercise price of GBP1.00 = USD1.65
• sold a call option that grants the option holder the right to buy USD 1million at a price of GBP1.00 = USD1.61 (this option has the same maturity date as the put).
Which of the following is a valid explanation for entering into these option positions?
- A . The company expects to receive USD 1million from a customer and wishes to offset the cost of the put option by the premium on the call option.
- B . The company expects to pay USD 1million to a supplier and wishes to offset the premium from the call option against the cost of the put option.
- C . The company expects to receive USD 1million from a customer and wishes to obtain an additional benefit if the USD strengthens beyond GBP 1.00 = USD 1.61.
- D . The company expects to pay USD 1million to a supplier and wishes to obtain additional protection against the USD strengthening beyond GBP 1.00 = USD 1.65.
A project has been evaluated on the basis that it will cost $14 million and will have a net present value of $2.3 million.
The project has commenced and $3 million of the initial $14 million has been invested. A problem has been discovered that will cost an additional $2.5 million to rectify. The $2.5 million will be payable immediately.
What is the NPV of continuing with this project?
- A . -$3 million
- B . -$0.2 million
- C . $1.8 million
- D . $2.8 million
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