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CIMA Exam CIMAPRA19-P03-1 Topic 3 Question 38 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam
Question #: 38
Topic #: 3
[All CIMAPRA19-P03-1 Questions]

A UK manufacturing company has simultaneously:

* purchased a put option to sell USD 1million at an exercise price of GBP1.00 = USD1.65

* sold a call option that grants the option holder the right to buy USD 1million at a price of GBP1.00 = USD1.61(this option has the same maturity date as the put).

Which of the following is a valid explanation for entering into these option positions?

Show Suggested Answer Hide Answer
Suggested Answer: B, C, E

by Yoko at Jan 22, 2024, 07:11 PM

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Makeda
1 days ago
Interesting, I was leaning towards option B at first, but the explanation for option D seems more comprehensive. Gotta pay attention to those details!
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Whitley
3 days ago
Hmm, the key here is the company's expectations. I think option D makes the most sense, as the company wants to protect itself against the USD strengthening beyond a certain point.
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Janine
4 days ago
But wouldn't the company want to protect against USD strengthening, so D makes more sense?
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Clare
6 days ago
I disagree, I believe the answer is D.
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Janine
8 days ago
I think the answer is C.
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India
9 days ago
But wouldn't the company want to protect against USD strengthening, so D makes more sense?
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Malcolm
10 days ago
I disagree, I believe the answer is D.
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India
16 days ago
I think the answer is C.
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