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CIMAPRA17-BA1-1 Exam - Topic 1 Question 35 Discussion

Company A is looking to protect itself from transaction exchange rate risk.Company A does not require 100% of the value of transaction to be protected, and it would like the method it uses to have the following characteristics* An agreed exchange rate for a specified period where both parties have a legal obligation* A separation of the contract guaranteeing the pnce of the currency from the underlying transaction.Which of the following would best provide the type of protection from exchange rate risk company A wants?
C) Forward contract
A) Future
B) Option
D) Floating exchange rate

CIMAPRA17-BA1-1 Exam - Topic 1 Question 35 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam
Question #: 35
Topic #: 1
[All CIMAPRA17-BA1-1 Questions]

Company A is looking to protect itself from transaction exchange rate risk.

Company A does not require 100% of the value of transaction to be protected, and it would like the method it uses to have the following characteristics

* An agreed exchange rate for a specified period where both parties have a legal obligation

* A separation of the contract guaranteeing the pnce of the currency from the underlying transaction.

Which of the following would best provide the type of protection from exchange rate risk company A wants?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Linn at May 09, 2022, 12:52 PM

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Kallie
10 months ago
I agree, forward contracts are the way to go for this kind of risk!
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Antione
10 months ago
Definitely A or C, but C seems more fitting for this scenario.
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Fletcher
11 months ago
Wait, can a forward contract really separate the transaction like that?
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Jaclyn
11 months ago
I think options might give more flexibility, though.
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Lennie
11 months ago
Forward contracts are great for locking in rates!
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Julio
11 months ago
I'm a bit confused by the wording of some of these options. I'll need to re-read them carefully to make sure I understand the nuances before choosing my answers.
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Salena
11 months ago
Okay, let me think this through step-by-step. I need to display the elements by model, so I'm guessing I'll need to access the model management tools in some way. I'm leaning towards option D, selecting Model Management and then Refresh Models, but I'll double-check the other options just to be sure.
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Valda
11 months ago
I'm a bit confused by the question. Removing the login ID seems like it might not be the right solution. I'll need to double-check the details before selecting my answers.
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Luis
11 months ago
I remember something about the Webex Teams client optimizing performance through node discovery, but I'm not sure if it prioritizes nodes based on STUN delays or something else.
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