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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
3 months ago
Just to clarify, the standard deviation is 0.5%, right?
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Celestina
3 months ago
Totally agree, A$82,250 makes sense with the given volatility.
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Lashandra
4 months ago
Wait, how can the VaR be that low? Seems off to me.
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Annalee
4 months ago
I think the VaR calculation should be around A$82,250.
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Brinda
4 months ago
The expected amount is BS20 million, so that's A$10 million at the current rate.
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Twanna
4 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
4 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
4 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
5 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
5 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
5 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
5 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
5 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
5 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
5 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
5 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
5 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
10 months 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
9 months ago
C) A$82,250
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Lynelle
9 months ago
B) A$164,500
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Cheryll
9 months ago
A) A$50,000
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Justine
10 months ago
Alright, let's think this through step-by-step. I've got this!
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Albina
9 months ago
Jules: C) A$82,250
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Cyndy
9 months ago
Keneth: B) A$164,500
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Jules
9 months ago
Jovita: A) A$50,000
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Keneth
9 months ago
User 3: What is the one-day 95% VaR in AS?
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Jovita
9 months ago
User 2: The current exchange rate is A$1 = B$2.
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Rosendo
10 months ago
User 1: So, Company A is based in country A with AS as its functional currency.
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Joseph
10 months 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
10 months ago
This seems like a tricky question. I'd better review my notes on value at risk (VaR) calculations.
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Lorenza
11 months ago
I'm not sure, but I think the correct answer is C) A$82,250.
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An
11 months ago
I agree with Benton, the one-day 95% VaR in AS should be A$164,500.
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Benton
11 months ago
I think the answer is B) A$164,500.
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