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CIMA Exam CIMAPRO19-P03-1 Topic 6 Question 43 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 43
Topic #: 6
[All CIMAPRO19-P03-1 Questions]

Kis a manufacturing company. It has sourced new equipment from the US to equip a new production facility.

It has to make a payment of USD1,000,000 in3 months' time.

K's production manager needs to know whether it is cheaper to use a forward contract or a money market hedge.

Current spot and forward exchange rates are as follows:

Current mid-point money market rates (annual) are as follows:

Ignoring taxation, which of the following statements is correct?

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

by Tiffiny at Dec 24, 2022, 10:40 AM

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Barrett
8 days ago
GBP32,078 saved with the money market hedge? That's a pretty hefty amount. I wonder if there's a catch.
upvoted 0 times
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Cammy
9 days ago
Forward contract saves GBP2,629? Hmm, that seems too low. I better review the exchange rates again.
upvoted 0 times
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Rebecka
10 days ago
The money market hedge saves GBP15,196? I'm not convinced. Let's double-check the calculations.
upvoted 0 times
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Boris
13 days ago
I'm not sure, but I think the money market hedge saves GBP32,078.
upvoted 0 times
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Gilma
14 days ago
I disagree, I believe the forward contract saves GBP2,629.
upvoted 0 times
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Sanda
15 days ago
I think the money market hedge saves GBP15,196.
upvoted 0 times
...

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