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CIMAPRA19-F03-1 Exam - Topic 5 Question 74 Discussion

Company A is based in country A with the AS as its functional currency. It expects to receive BS20 million from Company B in settlement of an export invoice.The current exchange rate is A$1 =B$2 and the daily standard deviation of this exchange rate = 0 5%What is the one-day 95% VaR in AS?
A) A$50,000 and B) A$164,500
C) A$82,250
D) A$822,500

CIMAPRA19-F03-1 Exam - Topic 5 Question 74 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 74
Topic #: 5
[All CIMAPRA19-F03-1 Questions]

Company A is based in country A with the AS as its functional currency. It expects to receive BS20 million from Company B in settlement of an export invoice.

The current exchange rate is A$1 =B$2 and the daily standard deviation of this exchange rate = 0 5%

What is the one-day 95% VaR in AS?

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Suggested Answer: A, B, E

by Fernanda at Oct 09, 2023, 02:41 AM

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Vi
10 months ago
Just to clarify, the standard deviation is 0.5%, right?
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Celestina
10 months ago
Totally agree, A$82,250 makes sense with the given volatility.
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Lashandra
10 months ago
Wait, how can the VaR be that low? Seems off to me.
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Annalee
10 months ago
I think the VaR calculation should be around A$82,250.
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Brinda
10 months ago
The expected amount is BS20 million, so that's A$10 million at the current rate.
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Twanna
10 months ago
I feel like I might have seen a similar question in our review sessions. If I recall correctly, the VaR should be based on the expected cash flow in AS and the volatility of the exchange rate.
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Selene
11 months ago
I think the daily standard deviation is crucial here, but I'm a bit confused about how to apply it to find the 95% VaR. I hope I remember the right multiplier!
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Magnolia
11 months ago
This question seems similar to one we practiced where we had to convert currencies and apply the VaR formula. I think I need to double-check the calculations for the exchange rate.
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Stefanie
11 months ago
I remember we calculated VaR using the standard deviation and the value at risk formula, but I'm not sure about the exact steps for this one.
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Nohemi
11 months ago
This seems straightforward enough. I just need to plug the numbers into the VaR formula and do the calculation. As long as I don't make any silly mistakes, I should be able to get the right answer.
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Ivory
11 months ago
Okay, I think I've got this. I'll need to calculate the potential change in the exchange rate at the 95% confidence level, then apply that to the expected receivable amount to get the VaR.
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Layla
11 months ago
Hmm, I'm a bit unsure about the steps here. I'll need to think through the formula for VaR and make sure I apply it correctly given the exchange rate information.
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Reynalda
11 months ago
This looks like a standard VaR calculation problem. I'll need to find the one-day 95% VaR in the functional currency of Company A.
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Essie
11 months ago
Hmm, I'm a bit confused by the state machine diagram. I'll need to study the transitions and actions more closely to figure out the right answer.
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Willard
11 months ago
I've got a strategy for this. I'll focus on the key details and try to logically work through the options.
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Edward
11 months ago
I'm a bit unsure about this one. Does the question mean that the web app and Cognitive Search service need to be in the same virtual network, or just that the Cognitive Search service needs a private endpoint in the same virtual network as the web app? I'll need to double-check the requirements.
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Aleshia
11 months ago
This seems like a straightforward question about file system management. I'll think through the options carefully and choose the one that best fits the description.
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Leontine
1 year ago
Ugh, VaR calculations always give me a headache. I wish they'd just ask about something more straightforward, like foreign currency translation.
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Bong
1 year ago
C) A$82,250
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Lynelle
1 year ago
B) A$164,500
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Cheryll
1 year ago
A) A$50,000
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Justine
1 year ago
Alright, let's think this through step-by-step. I've got this!
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Albina
1 year ago
Jules: C) A$82,250
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Cyndy
1 year ago
Keneth: B) A$164,500
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Jules
1 year ago
Jovita: A) A$50,000
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Keneth
1 year ago
User 3: What is the one-day 95% VaR in AS?
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Jovita
1 year ago
User 2: The current exchange rate is A$1 = B$2.
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Rosendo
1 year ago
User 1: So, Company A is based in country A with AS as its functional currency.
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Joseph
1 year ago
Hmm, the daily standard deviation of the exchange rate is given as 0.5%. I wonder if that's a typo or if it's meant to be a trick.
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Mireya
1 year ago
This seems like a tricky question. I'd better review my notes on value at risk (VaR) calculations.
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Lorenza
1 year ago
I'm not sure, but I think the correct answer is C) A$82,250.
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An
1 year ago
I agree with Benton, the one-day 95% VaR in AS should be A$164,500.
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Benton
1 year ago
I think the answer is B) A$164,500.
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