CIMAPRO19-P03-1 Exam - Topic 2 Question 105 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 105
Topic #: 2

[All CIMAPRO19-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?

AGBP/USD1.69

BGBP/USD1.73

CGBP/USD1.77

DGBP/USD1.65

Show Suggested Answer

Suggested Answer: B

by Johana at May 02, 2026, 10:26 AM

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Isadora

10 hours ago

6% inflation in the USA? That seems high!

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Oretha

6 days ago

I think the GBP will strengthen a bit.

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Francoise

11 days ago

Inflation in the UK is lower than in the USA.

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Barrie

16 days ago

I think I remember that we need to calculate the expected rate based on the inflation rates, but I can't remember if that means we should choose A or D.

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Adolph

2 months ago

I feel like the answer should be lower than 1.71 because of the higher inflation in the USA, but I'm not confident about the exact calculation.

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Asha

2 months ago

I think we practiced a similar question where we had to adjust for inflation rates. If I recall correctly, the formula involves the current spot rate and the inflation differential.

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Victor

2 months ago

I remember we discussed purchasing power parity in class, but I'm not entirely sure how to apply it to this specific question.

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