CIMA Exam CIMAPRO19-P02-1 Topic 5 Question 107 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 107
Topic #: 5

A company is investing in a huge diversification project. The plan is to develop and sell a whole new product line that they have never sold before. They've already started a massive marketing campaign for this new

product line and they are getting good feedback in their market research.

They've had to use debt funding in order to finance the project, but they hope that the returns will be worth the investment and restructuring. If they are successful they will be a step ahead of all their competitors and offer

something none of them can.

What is the risk appetite of this company?

ARisk seeking

BRisk averse

CRisk neutral

DImpossible to say

Show Suggested Answer

Suggested Answer: A

by Shawnna at Feb 08, 2025, 01:19 AM

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Kristofer

2 months ago

This company is like a gambling addict - all in on the new product line. I hope they've got a backup plan, otherwise they're playing with fire!

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Devorah

2 months ago

A. Risk seeking, no doubt. They're going all-in on this new product line. Might as well roll the dice while they're at it!

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Bettina

25 days ago

A. Risk seeking, no doubt. They're going all-in on this new product line. Might as well roll the dice while they're at it!

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Annelle

26 days ago

B) Risk averse

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Tequila

1 months ago

A) Risk seeking

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Shaquana

2 months ago

D. Impossible to say. We don't have enough information about their overall risk profile and decision-making process to determine their risk appetite here.

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Rasheeda

1 months ago

True, we would need to know more about their overall strategy and financial situation.

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Ronny

1 months ago

I agree, without more information it's hard to determine their risk appetite.

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Elza

1 months ago

D) Impossible to say

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Lashawn

1 months ago

C) Risk neutral

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Luis

1 months ago

B) Risk averse

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Carin

2 months ago

A) Risk seeking

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Shelba

2 months ago

But what if the project fails? Wouldn't that put the company in a risky position?

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Eva

3 months ago

I agree with Leontine, the company seems to have a high risk appetite to invest in a new product line.

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Leontine

3 months ago

I think the company is risk seeking because they are taking on debt to finance a new project.

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Moira

3 months ago

I think the answer is C. Risk neutral. They're not avoiding risk, but they're also not actively seeking it. They're just trying to diversify and stay competitive.

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Nida

3 months ago

This is a classic case of a risk-seeking company. Investing in a whole new product line with debt financing definitely shows they are willing to take on high risk for potentially high returns.

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