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Free CIMAPRO19-P03-1 Exam Braindumps (page: 19)

Page 18 of 69
PDF with 276 Questions

Which of the following is NOT a financial risk.

  1. Selling goods on credit terms.
  2. Taking out variable rate loans to finance short term investments.
  3. Sourcing raw materials overseas to manufacture goods.
  4. Global warming.

Answer(s): D



James owns a small company which sometimes suffers from credit risk. Which of the following measures should he put in place to help reduce this risk?

  1. Introduce credit checks for new customers.
  2. Reduce the company bank loans.
  3. Pay suppliers' invoices quicker.
  4. Look for a loan with a lower interest rate.

Answer(s): A



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?

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Answer(s): A



The shares of a company have a beta factor of 1.15. Therefore, which of the following must be true?

  1. The shares have more unsystematic risk than the stock market average.
  2. The shares have more systematic risk than the stock market average.
  3. The shares have more total risk than the stock market average.
  4. The shares have less unsystematic risk than the stock market average.

Answer(s): B






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