Online Access Free CIMA.P3.v2021-09-08.q126 Practice Test (Page 13)

P3 Exam Question 56

Which of the following will increase the value of a call option?

A.A decrease in the market value of the share.

B.An increase in the strike price.

C.A decrease in the volatility of the share.

D.An increase in the time to expiry.

P3 Exam Question 57

A government department is conducting a value for money audit on a school.
The school's pupils sit leaving exams. Classify each of the audit tests as either economy and efficiency or effectiveness.

P3 Exam Question 58

In relation to the use of the adjusted present value (APV) technique, which of the following statements are correct?

A.To apply APV the actual amounts of debt and equity in the capital structure must be known.

B.To apply APV, the proportions of debt and equity in the capital structure must be known.

C.The weighted average cost of capital - net present value technique and the APV technique will, if applied correctly, give the same answer.

D.The interest tax shield on the project's debt must be known, or at least estimated.

P3 Exam Question 59

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.

P3 Exam Question 60

A patient has been prescribed a new medicine by their physician. The medicine is accompanied by a leaflet describing potential adverse effects associated with taking it. Most of these potentially adverse effects are trivial, but the leaflet states that three patients in every 10,000 who take the medicine suffer a severe reaction requiring urgent medical attention.
Which of the following statements is true?

A.The patient should not be concerned because only those few patients who are susceptible to this reaction are at risk.

B.The patient should ignore the risk because there is only a 0.03% risk of a severe adverse reaction.

C.Statistically, the medicine is safe.

D.Statistical probabilities mean very little in themselves when dealing with decisions that could have serious consequences, such as whether to take this medicine.

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P3 Exam Question 56

P3 Exam Question 57

P3 Exam Question 58

P3 Exam Question 59

P3 Exam Question 60

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