Online Access Free CIMA.P3.v2022-12-30.q112 Practice Test (Page 24)

P3 Exam Question 111

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.A money market hedge is easier and less expensive to organise than a future or forward contract.

B.The timing of the payable does not permit the use of a forward contract.

C.The relevant currency markets are very thinly traded and the treasurer believes that forward contracts are mispriced.

D.Money market hedges can be unwound whereas positions in derivatives cannot.

E.There are no forward contracts available for the purchase of the payable currency using IOK's home currency.

P3 Exam Question 112

Z is a multinational pharmaceuticals company with operations across Europe, America and Asia.
It is currently investigating the possibility of setting up a chemical and specialist production facility in South America. This would be a multi $billion investment. What steps should Z take to manage the following risks in this long term venture.

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P3 Exam Question 111

P3 Exam Question 112

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