CIMAPRO19-P03-1 Exam - Topic 5 Question 93 Discussion

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

Question #: 93
Topic #: 5

[All CIMAPRO19-P03-1 Questions]

FGT is evaluating the political risks associated with its operations around the world.

Which of the following would indicate that a particular subsidiary has a high level ofpolitical risk?

AForthcoming elections in the subsidiary's host country.

BThe subsidiary's host country requires the active participation of local partners before the subsidiary can operate.

CCompany law in the subsidiary host country is lax.

DThe subsidiary islocated a considerable distance from FGT's home country.

EThesubsidiary employs a large number of nationals from the host country.

Show Suggested Answer

Suggested Answer: A, B, C

by Winfred at Jul 09, 2025, 01:50 PM

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Kassandra

2 months ago

Surprised that employing locals could indicate high risk.

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Meghan

3 months ago

Totally agree, political instability is a huge risk factor!

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Geraldine

3 months ago

I think local partner requirements can be a red flag too.

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Vannessa

3 months ago

Really? I thought lax company laws were a good thing.

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Margret

3 months ago

A forthcoming election usually means uncertainty.

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Marla

4 months ago

I’m not convinced that distance from the home country, like in option D, really indicates political risk. It seems more about logistics than politics.

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Halina

4 months ago

I practiced a question similar to this, and I think option C about lax company law could definitely signal high political risk. It makes me uneasy about compliance.

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Dalene

4 months ago

I'm not entirely sure, but I think having to partner with locals, like in option B, could also suggest a higher risk. It feels like it could complicate things.

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Lyndia

4 months ago

I remember discussing how forthcoming elections can create uncertainty, so I think option A might indicate high political risk.

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Aron

4 months ago

This is a good question to test our understanding of political risk. I'll make sure to carefully consider each factor and select the ones that are most indicative of high risk for the subsidiary.

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Ashanti

5 months ago

Okay, I think I've got this. Upcoming elections, local partner requirements, and lax regulations are all clear signs of high political risk. I'll make sure to select those options.

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Carri

5 months ago

Hmm, I'm a bit unsure about this one. I know political risk is important, but I'm not sure I fully understand all the factors that indicate high risk. I'll need to think this through carefully.

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Cecilia

5 months ago

This seems like a straightforward question about identifying political risk factors. I'll focus on the key factors like upcoming elections, local partner requirements, and lax regulations.

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Angelyn

7 months ago

Haha, C is a classic trap answer. 'Lax company law' might mean less red tape, but it could also mean less protection for foreign businesses. B is the way to go.

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Billy

6 months ago

I agree, C can be misleading. B seems like the safer option.

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Wilda

7 months ago

I think both factors are important in assessing political risk, along with the lax company law in the host country.

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Francesco

7 months ago

That's true, having to rely on local partners can make the subsidiary vulnerable to political changes.

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Taryn

7 months ago

But what about the requirement for local partners to operate? That could also indicate high political risk.

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Wilda

7 months ago

I agree with Francesco, political instability during elections can pose a risk.

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Francesco

8 months ago

I think forthcoming elections in the host country would indicate high political risk.

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Annette

8 months ago

D seems like an odd choice. Being far from the home country doesn't necessarily mean higher political risk. I'd go with B as well.

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Mariann

7 months ago

C) Company law in the subsidiary host country is lax.

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Jani

7 months ago

B) The subsidiary's host country requires the active participation of local partners before the subsidiary can operate.

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Lera

7 months ago

A) Forthcoming elections in the subsidiary's host country.

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Kimberlie

8 months ago

I think the answer is B. Requiring local partners indicates the government wants to maintain control and influence over foreign operations, which can increase political risk.

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Sabine

7 months ago

That's true, elections can bring uncertainty and instability, which are factors in political risk.

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Leigha

7 months ago

But what about forthcoming elections in the host country? Wouldn't that also indicate high political risk?

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Almeta

7 months ago

I agree, having local partners can increase political risk.

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