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 20,2024.
- Exam Code: CIMAPRA19-P03-1-ENG
- Exam Name: P3 Risk Management (Online)
- Certification Provider: CIMA
- Latest update: Nov 20,2024
You are the Management Accountant for a company which supplies baked food to a string of retail outlets; biscuits, cakes, savoury snacks etc.
You discover that a trainee employee, who is responsible for cleaning out the delivery vans has been taking damaged goods and packets which have reached their sales expiry date and has been selling them to friends. These products would otherwise have been discarded as waste.
The trainee in question is the nephew of one of the senior managers.
What is the correct course of action?
- A . Have a quiet word with the trainee and ask him to stop.
- B . Have a quiet word with the senior manager, the trainee’s relative and ask them to deal with it.
- C . Document the facts and escalate to the trainee’s manager.
- D . Do nothing, the product was designated as waste anyway.
VBN is a multinational company that has 60 subsidiary companies that operate in 11 countries. VBN evaluates the performance of each subsidiary as an investment centre, using residual income to measure performance.
Which THREE of the following threats of dysfunctional behaviour may arise from VBN’s use of residual income to measure subsidiaries’ performance?
- A . Subsidiary boards may actively hedge translation risks.
- B . Subsidiary boards may take a short-term view to investment projects.
- C . Subsidiary boards may waste time by arguing over transfer prices.
- D . Subsidiary boards may waste time and incur unnecessary fees in order to recognise gains on the revaluation of property.
- E . Subsidiary boards may be motivated to spend heavily on capital expenditure in order to ensure that budget allocations are maintained and even increased.
DRAG DROP
Match the descriptions shown in the boxes below with the method of quantifying risk exposure it best describes.
The long-term prospects for inflation in the UK and the USA are 2% and 6% per annum respectively.
The GBP/USD spot rate is currently GBP/USD1.71.
Using purchasing power parity theory, what GBP/USD spot rate would you expect to see in three months’ time?
- A . GBP/USD1.69
- B . GBP/USD1.73
- C . GBP/USD1.77
- D . GBP/USD1.65
M, a manufacturing company, has had some problems with defects in one of the main products it produces. This product has been made by the company for many years and is very profitable. Last month it had over 300 defects reported by customers which is more than 15% of products sold. This is a reputation risk for M and is also affecting profitability.
Which of the following controls could M introduce to reduce defects and also increase profitability?
- A . M could increase the number of quality control staff.
- B . M could introduce a procedure where quality control staff sign a form at the end of each day to say they have examined 1 in 10 products for defects and they are satisfied with the quality.
- C . The production director could examine one in every 10 products and sign a form to say they are satisfactory.
- D . M could service machinery at least once a month as recommended by the machinery supplier.
- E . M could check all employees qualifications to ensure they are qualified for their jobs.
Systems Development Lifecycle (SDLC) is used to manage risk within the development of new computer systems.
Which THREE of the following are appropriate controls to manage risk within the SDLC Process?
- A . When planning the new system, a clear business case must be approved specifying functionality, data transformation, expected costs and benefits.
- B . When designing the new system, controls must be put in place to ensure that all the functionalities of the old system are replicated.
- C . When developing the new system, the developers must follow defined programming standards and carry out component test to specified test harness outputs.
- D . When doing the analysis for the new system particular care should be taken over the data specification, transformation and manipulation, ensuring that expected outputs are defined and that such output meets the needs and expectations of the business users.
- E . When the implementation of the new system is taking place, parallel running must be undertaken to ensure the output for the new system exactly matches that from the old system.
- F . The Post Completion Review should take place immediately after the implementation while all the facts are still fresh in everyone’s minds.
Company H operates a fleet of lorries. The Internal Auditor recently conducted an investigation into the transport needs of the company. Their report recommended that the lorries be disposed of, the drivers made redundant, and the distribution of the company’s products be outsourced.
The type of investigation carried out by the Internal Auditor is best described as a:
- A . Compliance Audit
- B . Economy Audit
- C . Efficiency Audit
- D . Effectiveness Audit
A project has been evaluated on the basis that it will cost $22 million and will have a net present value of $4.3 million The project has commenced and $5 million of the $22 million has been invested. A problem has been discovered that will cost an additional $4.5 million to rectify. The $4.5 million will be payable immediately.
What is the NPV of continuing with this project?
- A . -$5million
- B . -$0.2million
- C . $1million
- D . $4.8million
CORRECT TEXT
A US company enters into a five year borrowing with bank A at a floating rate of USD Libor plus 2%.
It simultaneously enters into an interest rate swap with bank B at 3.5% fixed against USD Libor plus 1%.
What is the hedged borrowing rate, taking the borrowing and swap into account?
Give your answer to 1 decimal place
Zia is an accountant and wishes to take out a Forward Rate Agreement (FRA) as a hedging instrument. The company treasurer has advised that a short-term interest rate (STIR) future would be better.
Which of the following is true of an STIR?
- A . A STIR can be tailored to the exact needs of the company.
- B . A STIR is flexible and the position can be closed quickly and easily.
- C . A STIR must be kept for the whole duration of the contract.
- D . If interest rates have gone down the price of the future will have fallen.
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