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CIMAPRO19-P03-1 Exam - Topic 5 Question 65 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 65
Topic #: 5
[All CIMAPRO19-P03-1 Questions]

Zia is an accountant and wishes to take out a Forward Rate Agreement (FRA)as a hedging instrument. The company treasurer has advised that a short-term interest rate (STIR)future would be better.

Which of the following is true of an STIR?

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Suggested Answer: B, C, E

by Lavonda at Apr 25, 2024, 06:20 AM

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Nieves
3 months ago
If rates drop, the future price should actually rise, right?
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Chuck
3 months ago
I think option C is misleading; you can close a STIR early.
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Bettina
3 months ago
Wait, can you really tailor a STIR to exact needs?
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Marva
4 months ago
I agree, closing a STIR position is super easy!
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Tawna
4 months ago
A STIR is definitely more flexible than a FRA.
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Beth
4 months ago
I vaguely recall that if interest rates drop, the value of a future might actually increase, so option D seems off to me.
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Janella
4 months ago
I’m a bit confused about option C. I thought you could close out a STIR before the contract ends if needed?
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Kati
4 months ago
I think option B sounds right because STIRs are often more liquid, allowing positions to be closed quickly.
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Cammy
5 months ago
I remember that STIRs are generally more standardized, so I'm not sure if they can be tailored exactly to a company's needs like an FRA.
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Shay
5 months ago
If interest rates have gone down, the price of the STIR future should have risen, not fallen. I better double-check that detail.
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Earleen
5 months ago
Okay, I know STIR futures are standardized contracts, so the tailoring aspect is important. I'll focus on understanding the flexibility and closing out the position.
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Alonzo
5 months ago
This question seems straightforward, I think I can handle it. Let me think through the key differences between FRAs and STIR futures.
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Antione
5 months ago
Hmm, I'm a bit unsure about the flexibility of STIR futures compared to FRAs. I'll need to review my notes on the characteristics of each instrument.
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Eliz
5 months ago
Okay, I think I understand this. Okta is decrypting the Kerberos ticket and finding the username, but it's the IWA Agent and AD Agent that are actually doing the authentication against Active Directory. So the statement is not completely valid.
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Timothy
5 months ago
Hmm, I'm a bit unsure about this one. Should I decrease the values instead to optimize performance? I'm not totally clear on how the Working Set settings interact with the increased RAM.
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Marsha
10 months ago
Option D is incorrect - if interest rates fall, the price of the STIR future will actually rise, not fall. Gotta know your derivatives basics!
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Mohammad
9 months ago
A) A STIR can be tailored to the exact needs of the company.
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Mohammad
10 months ago
B) A STIR is flexible and the position can be closed quickly and easily.
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Edelmira
11 months ago
Hah, imagine being stuck in an FRA contract and interest rates go the wrong way. With a STIR future, at least you can run for the hills when things get dicey.
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Fredric
9 months ago
D) If interest rates have gone down the price of the future will have fallen.
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Joni
9 months ago
C) A STIR must be kept for the whole duration of the contract.
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Melina
10 months ago
B) A STIR is flexible and the position can be closed quickly and easily.
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Long
10 months ago
A) A STIR can be tailored to the exact needs of the company.
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Georgeanna
11 months ago
Option B is the correct answer. STIR futures allow you to adjust your position as needed, unlike being locked into a contract.
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Katlyn
11 months ago
A STIR future seems like the better option for Zia's hedging needs. It's flexible and can be closed out easily, unlike an FRA which is less customizable.
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King
11 months ago
I agree with Pok, B) A STIR is indeed flexible and can be closed quickly. It's a better option for Zia.
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Pok
11 months ago
I disagree, I believe B) A STIR is flexible and the position can be closed quickly and easily.
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Marya
11 months ago
I think A) A STIR can be tailored to the exact needs of the company.
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