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CIMAPRA19-F03-1 Exam - Topic 3 Question 62 Discussion

ZZZ wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate it pays. ZZZ can borrow floating at the risk-free rate + 1, and fixed at 10%.Which of the following companies would be the most appropriate for ZZZ to enter into a swap with?
B) Company CCA - it can borrow at risk-free rate + Y% and fixed at 9% and C) Company BBA - it can borrow floating at risk-free rate +VA and fixed at 12% and D) Company AAB - it can borrow floating at risk-free rate + % and fixed at 9.5%
A) Company DDA - it can borrow at risk-free rate + 1 Vz and fixed at 10.5%

CIMAPRA19-F03-1 Exam - Topic 3 Question 62 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 62
Topic #: 3
[All CIMAPRA19-F03-1 Questions]

ZZZ wishes to borrow at a floating rate and has been told that it can use swaps to reduce the effective interest rate it pays. ZZZ can borrow floating at the risk-free rate + 1, and fixed at 10%.

Which of the following companies would be the most appropriate for ZZZ to enter into a swap with?

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Suggested Answer: B, C, D

by Jeanice at Dec 29, 2022, 06:26 PM

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Corazon
7 months ago
I’m skeptical about this swap strategy; is it really worth it?
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Miles
8 months ago
Company AAB looks decent too, but not sure if it's the best fit.
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Juan
8 months ago
Wait, how can Company DDA have a higher fixed rate and still be a good choice?
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Taryn
8 months ago
I agree, Company CCA seems like the best option here!
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Daniel
8 months ago
Company BBA has the highest fixed rate, not a good match.
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Stephaine
8 months ago
I feel like Company DDA might not be ideal since its fixed rate is higher than ZZZ's current fixed borrowing rate. I think we should focus on Company CCA or AAB for better terms.
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Slyvia
8 months ago
I practiced a similar question, and I think the key is to compare the fixed rates. Company BBA has a high fixed rate, so it doesn't seem like a good choice.
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Tracey
8 months ago
I'm not entirely sure, but I think we should look for a company that can offer a better fixed rate than ZZZ's current options. Company AAB seems interesting, but I'm not confident about the floating rate.
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Marisha
9 months ago
I remember that the goal of a swap is to find a counterparty with a better rate than what you have. I think Company CCA might be the best option since it has a lower fixed rate.
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Roy
9 months ago
Okay, let's see. The question is asking what the "Reviewable Items" total includes, so I'll need to analyze each of the answer choices closely.
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Cassie
9 months ago
Based on the question, I think option C is the correct answer. The "vxstat smartio" command should give me the SmartIO cache hit ratio for the /data file system.
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Twanna
9 months ago
This question seems straightforward, but I want to make sure I understand the details correctly before answering.
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Kasandra
9 months ago
I think I've got it! The question is asking which statement is true, and based on the information provided, the answer has to be C. Mary's broker, Omnivor and Associates, can execute the trade at the best bid price.
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