Free CIMAPRO19-P03-1 Exam Braindumps (page: 11)

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Will owns $400,000 of shares in Company X.
Company X has a daily volatility of 1% of its share price. Calculate the 28 day value at risk that shows the most Will can expect to lose during a 28 day period. (Will wishes to be 90% certain that the actual loss in any month will be less than your predicted figure).
Give your answer to the nearest $000.

  1. $27

Answer(s): A



Which of the following best describes the relevance of value at risk (VaR) as a decision tool?

  1. VaR quantifies past volatility
  2. VaR quantifies future volatility
  3. VaR quantifies the maximum loss that could ever be incurred
  4. VaR can only measure downside risk

Answer(s): A



The long-term prospects for interest rates in the UK and the USA are 2% and 6% per annum respectively.
The GBP/USD spot rate is currently GBP/USD1.71.
Using interest rate parity theory, what GBP/USD spot rate would you expect to see in six months' time?

  1. GBP/USD = 1.74
  2. GBP/USD = 1.78
  3. GBP/USD = 1.65
  4. GBP/USD = 1.67

Answer(s): A



Multinational companies have a variety of methods by which to manage currency risk. Select ALL internal hedging methods from the following list.

  1. Leading and lagging
  2. Invoice in home currency
  3. Matching
  4. Pooling
  5. Money market hedge
  6. Forward contracts

Answer(s): A,B,C,D






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