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CIMAPRA19-P03-1 Exam - Topic 2 Question 25 Discussion

The long-term prospects for inflation in the UK and the USA are 2% and 6% per annum respectively.The GBP/USD spot rate is currently GBP/USD1.71.Usingpurchasingpowerparitytheory, what GBP/USD spot rate would you expect to see inthree months' time?
A) GBP/USD1.69 and B) GBP/USD1.73 and D) GBP/USD1.65
C) GBP/USD1.77

CIMAPRA19-P03-1 Exam - Topic 2 Question 25 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam
Question #: 25
Topic #: 2
[All CIMAPRA19-P03-1 Questions]

The long-term prospects for inflation in the UK and the USA are 2% and 6% per annum respectively.

The GBP/USD spot rate is currently GBP/USD1.71.

Usingpurchasingpowerparitytheory, what GBP/USD spot rate would you expect to see inthree months' time?

Show Suggested Answer Hide Answer
Suggested Answer: A, B, D

by Nana at Mar 24, 2023, 08:53 AM

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Helene
10 months ago
B feels right, but I’m not sure about the 2% UK inflation.
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Martha
10 months ago
I'm leaning towards A, seems realistic.
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Rolf
10 months ago
6% inflation in the USA? That seems high!
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Jestine
11 months ago
I think GBP/USD will actually drop, so D makes sense.
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Herschel
11 months ago
The inflation rates are pretty telling!
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Launa
11 months ago
I feel like the answer should be closer to GBP/USD1.69, but I can't remember the exact formula we used in class.
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Leota
11 months ago
If the UK has lower inflation, the GBP should appreciate against the USD, right? But I'm confused about how much it will change.
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Alona
11 months ago
I think we practiced a similar question where we calculated future exchange rates based on inflation rates. I might need to double-check my calculations.
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Felicidad
11 months ago
I remember that purchasing power parity adjusts for inflation differences, but I'm not sure how to apply it here.
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Marylyn
11 months ago
This seems straightforward - the company is looking to evaluate the success of an email marketing campaign, so the metric that would best capture that is conversions.
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Goldie
11 months ago
Okay, let me break this down step-by-step. I know Blue Prism processes can be exposed as web services, but I'm not sure about business objects. I'll need to double-check that.
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Farrah
11 months ago
I'm a bit confused by the nested loops and the way the variables are being updated. I'll need to take some time to work through this step-by-step.
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Tamera
11 months ago
Hmm, this seems a bit tricky. I'll need to carefully read through the question and think about what the "occurs value" means and how that relates to the input ports.
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Toshia
11 months ago
I'm a little confused by this question. I thought unit tests were more about checking the overall integration of a system, but I guess that's not the case. Let me re-read the options.
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Therese
11 months ago
No problem, I've got this! I'll just plug in the values and calculate the total interest earned over the 6 years.
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Brandon
1 year ago
Expecting the Pound to drop like a rock? Nah, this isn't the 70s, mate. I'd go with B for a more reasonable adjustment.
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Gianna
1 year ago
I would also go with B) GBP/USD1.73 for a more realistic expectation.
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Julieta
1 year ago
I agree, B) GBP/USD1.73 seems like a good choice.
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Arlene
1 year ago
I think B) GBP/USD1.73 is a more reasonable adjustment.
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Olive
1 year ago
This is a classic purchasing power parity problem. I'd be surprised if the answer isn't one of the middle options.
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Jerlene
1 year ago
C) GBP/USD1.77
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Tony
1 year ago
B) GBP/USD1.73
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Benton
1 year ago
A) GBP/USD1.69
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Winifred
1 year ago
Option D seems a bit too extreme, given the inflation rate difference. I'm leaning towards B or C.
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Alease
1 year ago
Yeah, D) GBP/USD1.65 does seem too extreme considering the inflation rates.
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Erasmo
1 year ago
I'm not sure about A) GBP/USD1.69, it seems a bit low.
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Milly
1 year ago
I agree, C) GBP/USD1.77 could also be a good option.
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Fausto
1 year ago
I think B) GBP/USD1.73 is a reasonable choice.
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Gilberto
1 year ago
Yeah, option D seems unlikely. B or C makes more sense given the inflation rates.
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Nichelle
1 year ago
I would go with option B or C as well. Option D does seem too low.
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Edelmira
1 year ago
I'm also leaning towards B or C. The inflation rate difference is significant.
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Cristal
1 year ago
I agree, option D does seem extreme. I think B or C is more likely.
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Kassandra
1 year ago
Hmm, this one's tricky. I'd need to double-check my purchasing power parity calculations, but I think option C looks about right.
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Rutha
1 year ago
I think the GBP/USD spot rate will remain stable at GBP/USD1.71 as the inflation rates are already priced in.
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Latosha
1 year ago
If inflation rates are 2% and 6% respectively, then the GBP should depreciate against the USD. I'd go with option B.
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Nydia
1 year ago
I agree, option B seems like the most logical answer.
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Ligia
1 year ago
I think option B is the best choice.
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Jonelle
1 year ago
I disagree, I believe the GBP/USD spot rate will increase to GBP/USD1.73 due to higher inflation in the USA.
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Andra
1 year ago
I think the GBP/USD spot rate will decrease to GBP/USD1.69 in three months.
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