CIMA CIMAPRA19-P03-1 Exam Questions
P3 Risk Management (Online) (Page 5 )

Which THREE of the following are principles of good corporate governance according to the UK Corporate Governance Code?

A US company has to pay £500,000 for a new machine.
You have the following information on currencies.
EUR 1 = £1.2300
EUR 1 = USD 1.6200
What is the cost of the machine in USD?
Give your answer to the nearest $.

SDF has a variable rate loan of $100 million on which it is paying interest of LIBOR + 2%. SDF entered into a swap with CV bank to convert this to a fixed rate 7% loan. CV bank charges an annual commission of 0.3% for making this arrangement. Calculate the net payment from SDF to CV bank at the end of the first year if LIBOR was 3% throughout the year.
Give your answer in $ million, to one decimal place.

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 project requires a capital investment of £2.7million. The project will save £450,000 each year after taxation. Assume the savings are in perpetuity. The business risk of the venture requires a 15% discount rate. The company has to borrow £1million to finance the project at a rate of 9% and the net tax shield is 30%, the project supports debt which generates an interest tax shield of 0.30 x 0.09 x £1million, which is £27,000 per year in perpetuity.
Calculate the project's adjusted present value.