Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMAPRO19-P03-1 Exam - Topic 5 Question 58 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 58
Topic #: 5
[All CIMAPRO19-P03-1 Questions]

VBN's home currency is the V$. On 1 January, VBN must make a payment of C$2 million on 31 March of that same year.

On 1 January the spot exchange rate was V$1 = C$0.4.

On 1 January VBN paid $180,000 for a call option to buy C$2 million for V$5.5 million on 31 March. VBN's cost of borrowing was 8% per year.

On 31 March the spot rate was V$1 = C$0.45.

What was the total cost, including the cost of the option, of settling the payable?

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

by Andra at Dec 08, 2023, 10:03 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P03-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Brock
4 months ago
Not sure about these calculations, feels off.
upvoted 0 times
...
Katina
5 months ago
Definitely going with option A, seems right to me!
upvoted 0 times
...
Salley
5 months ago
Wait, did the spot rate really change that much?
upvoted 0 times
...
Trinidad
5 months ago
I think the total cost is around V$5.5 million.
upvoted 0 times
...
Olga
5 months ago
The call option cost V$180,000.
upvoted 0 times
...
Selma
6 months ago
I feel like I might have mixed up the calculations for the option and the borrowing cost. I need to double-check how those interact with the final payment.
upvoted 0 times
...
Vallie
6 months ago
If I recall correctly, we need to convert the C$2 million at the spot rate on 31 March, then add the option cost. I hope I got that right!
upvoted 0 times
...
Kendra
6 months ago
I think the total cost should include the option premium and the amount paid for the currency at the spot rate, but I’m a bit confused about how to calculate the final figure.
upvoted 0 times
...
Blair
6 months ago
I remember we practiced a similar question about options and exchange rates, but I'm not sure how to factor in the cost of borrowing here.
upvoted 0 times
...
Elroy
6 months ago
This seems pretty straightforward. I just need to do the math correctly and I'm confident I can get the right answer.
upvoted 0 times
...
Brent
6 months ago
I think I've got a good handle on this. I'll start by calculating the cost of the payable on 31 March, then add in the option cost. Should be straightforward.
upvoted 0 times
...
Earleen
6 months ago
Hmm, not sure I fully understand how to incorporate the call option into the total cost. I'll have to review the details carefully.
upvoted 0 times
...
Rebbeca
6 months ago
This looks like a tricky foreign exchange question. I'll need to carefully work through the calculations to get the right answer.
upvoted 0 times
...
Irene
6 months ago
Okay, let me think this through step-by-step. I need to figure out the total cost of settling the payable, including the option cost.
upvoted 0 times
...
Donte
6 months ago
I'm a little confused by the options. Does GDS really help with database failovers without requiring Data Guard Broker? I'll need to double-check that detail before answering.
upvoted 0 times
...
Jesusita
11 months ago
I wish they'd ask about something more exciting, like the latest celebrity gossip. This is just boring finance stuff.
upvoted 0 times
Melinda
10 months ago
I'm pretty sure it's C) V$4.444 million.
upvoted 0 times
...
Ora
10 months ago
No, I believe it's B) V$5.684 million.
upvoted 0 times
...
Willow
10 months ago
I think the answer is A) V$4.628 million.
upvoted 0 times
...
...
Stephanie
11 months ago
Okay, let's see... I just need to crunch the numbers and figure out the best option. No biggie, right? *sweats profusely*
upvoted 0 times
...
Nicholle
11 months ago
Ha! This is like a currency exchange puzzle. I bet the answer is hidden in all those numbers and dates.
upvoted 0 times
Ariel
11 months ago
User 3: The answer must be one of the options provided, let's do the math.
upvoted 0 times
...
Ben
11 months ago
User 2: Yes, we have to consider the spot exchange rates and the cost of the option.
upvoted 0 times
...
Daniel
11 months ago
User 1: I think we need to calculate the total cost including the option.
upvoted 0 times
...
...
Rima
12 months ago
Ugh, why do they always make these questions so complicated? I just want a simple, straightforward answer.
upvoted 0 times
...
Kris
12 months ago
Hmm, this question seems a bit tricky. I'll need to carefully calculate the exchange rates and the cost of the option to determine the total cost.
upvoted 0 times
Julian
11 months ago
User 2: Yes, we should consider the spot exchange rate and the cost of borrowing as well.
upvoted 0 times
...
Chun
11 months ago
User 1: I think we need to calculate the total cost including the cost of the option.
upvoted 0 times
...
Gayla
11 months ago
User 2: Yes, we should consider the spot exchange rates and the cost of borrowing as well.
upvoted 0 times
...
Beata
11 months ago
User 1: I think we need to calculate the total cost including the cost of the option.
upvoted 0 times
...
...
Maile
1 year ago
But the cost of the option was $180,000, so the total cost should be lower than that. That's why I chose A.
upvoted 0 times
...
Olive
1 year ago
I disagree, I believe the answer is B) V$5.684 million.
upvoted 0 times
...
Maile
1 year ago
I think the answer is A) V$4.628 million.
upvoted 0 times
...

Save Cancel