CIMAPRO19-P02-1 Exam - 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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Nieves

4 months ago

I’d say they’re more risk averse if they’re restructuring.

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Audry

5 months ago

Good feedback in research, but still a huge gamble!

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Rosio

5 months ago

Really? I think it's too early to tell if they'll succeed.

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Johnna

5 months ago

Using debt funding shows they're willing to take big chances.

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Clay

5 months ago

Sounds like they're definitely risk seeking!

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Brendan

6 months ago

I wonder if it's impossible to say without more context on their overall strategy and past behavior.

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Iluminada

6 months ago

This reminds me of a practice question where a company took a similar approach. I think they were labeled as risk neutral, but this feels different.

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Johnna

6 months ago

I'm not so sure about that. They might be risk averse if they're trying to hedge against potential losses with a strong marketing campaign.

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Mayra

6 months ago

I think the company is definitely risk seeking since they're investing heavily in a new product line and using debt funding.

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Chau

6 months ago

I'm a bit confused on this one. The company is taking on debt, but they also seem to have done their market research. I'm not sure if that makes them risk-seeking or just risk-neutral. I might have to mark "Impossible to say" for this question.

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Carisa

6 months ago

Okay, let's see. The company is investing heavily in a new product line, which they've never done before. That's a pretty risky move, but they're hoping the returns will be worth it. I think I'll go with risk-seeking for this one.

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Jina

6 months ago

Hmm, I'm not sure about this one. The company is getting good market research feedback, but they're also using debt financing, which could indicate either risk-seeking or risk-neutral behavior. I'll have to think this through carefully.

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Catarina

6 months ago

This seems like a pretty straightforward risk appetite question. The company is taking on a lot of debt to finance a major diversification project, which suggests they have a risk-seeking appetite.

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Kristofer

1 year 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

1 year 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

1 year 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

1 year ago

B) Risk averse

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Tequila

1 year ago

A) Risk seeking

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Shaquana

1 year 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 year ago

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

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Ronny

1 year ago

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

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Elza

1 year ago

D) Impossible to say

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Lashawn

1 year ago

C) Risk neutral

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Luis

1 year ago

B) Risk averse

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Carin

1 year ago

A) Risk seeking

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Shelba

1 year ago

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

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Eva

1 year 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

1 year ago

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

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Moira

1 year 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

1 year 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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