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CIMAPRA19-F03-1 Exam - Topic 4 Question 6 Discussion

A large, listed company in the food and household goods industry needs to raise $50 million for a period of up to 6 months.It has an excellent credit rating and there is almost no risk of the company defaulting on the borrowings. The company already has a commercial paper programme in place and has a good relationship with its bank.Which of the following is likely to be the most cost effective method of borrowing the money?
D) Commercial paper
A) Bank overdraft
B) 6 month term loan
C) Treasury Bills

CIMAPRA19-F03-1 Exam - Topic 4 Question 6 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 6
Topic #: 4
[All CIMAPRA19-F03-1 Questions]

A large, listed company in the food and household goods industry needs to raise $50 million for a period of up to 6 months.

It has an excellent credit rating and there is almost no risk of the company defaulting on the borrowings. The company already has a commercial paper programme in place and has a good relationship with its bank.

Which of the following is likely to be the most cost effective method of borrowing the money?

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Suggested Answer: D

by Rhea at May 08, 2022, 09:18 PM

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Kaitlyn
11 months ago
Surprised they don’t just use the overdraft!
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Royal
11 months ago
A term loan would be more expensive, no doubt.
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Mayra
11 months ago
Really? I thought treasury bills were safer.
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Tamekia
11 months ago
I agree, low cost and quick access!
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Olga
11 months ago
Commercial paper seems like the best option here.
upvoted 0 times
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Velda
11 months ago
Hmm, I'm not totally sure about this one. I'll have to think it through carefully.
upvoted 0 times
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Artie
12 months ago
I remember that the resource-based view focuses on internal strengths, right? I think it's about leveraging unique assets for competitive advantage.
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Mitzie
12 months ago
I think the key here is the latency between the data centers. With 20ms of latency, that's going to introduce a lot of delay in streaming the vDisk, so option A seems like the most relevant reason.
upvoted 0 times
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