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CIMAPRO19-P03-1 Exam - 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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Arlette
7 months ago
I heard the money market hedge is usually more cost-effective.
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Zona
7 months ago
Definitely leaning towards the forward contract saving GBP2,629.
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Inocencia
7 months ago
Wait, how can the money market hedge save that much? Sounds off.
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Rickie
7 months ago
I think the forward contract is the better option here.
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Maybelle
8 months ago
The money market hedge saves GBP15,196.
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Crista
8 months ago
I vaguely remember that the money market hedge could save a significant amount, maybe around GBP15,000, but I’m not confident about the exact figure.
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Hyun
8 months ago
I feel like the forward contract might save more, but I need to double-check the calculations we practiced last week.
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Natalya
8 months ago
I think we did a similar practice question where the money market hedge was cheaper, but I can't recall the specific numbers we used.
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Suzan
8 months ago
I remember we discussed forward contracts and money market hedges in class, but I'm not sure how to calculate the exact savings for each option.
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Mari
8 months ago
This is a good test of my string processing skills. I'm confident I can figure out the right approach here.
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Glenna
8 months ago
Hmm, I'm a bit unsure about this one. I know we can use the Business Manager to import/export site data, but I'm not sure if that's the right approach here. I'll have to think it through carefully.
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Chantell
8 months ago
I'll break this down step by step - first calculate EMI, then split interest and principal, and track interest paid in that specific financial year.
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Clay
8 months ago
I'm leaning towards Option B since it mentions both logging and emailing the admin, but I'm not 100% sure about the Compensating Service Transaction pattern.
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Lettie
1 year ago
Wait, are we supposed to use the spot rate or the forward rate? I'm so confused, I might just hedge my bets and go with option C.
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Leonardo
12 months ago
Sounds good, let's hedge our bets with the forward contract.
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Gwenn
1 year ago
I agree, let's go with option B then.
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Clemencia
1 year ago
I think we should use the forward rate for the calculation.
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Sharee
1 year ago
The forward contract saves GBP1,901? That's pocket change! I hope the other options are more substantial.
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Lorrine
11 months ago
User 4: Yeah, that seems like a small amount compared to the money market hedge.
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Viki
11 months ago
User 3: The forward contract saves GBP1,901
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Rebeca
11 months ago
User 2: That's a significant amount of savings!
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Tamra
12 months ago
User 1: The money market hedge saves GBP15,196
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Dacia
12 months ago
User 4: Yeah, that seems like a small amount compared to the money market hedge.
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Coletta
12 months ago
User 3: The forward contract saves GBP1,901
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Arlette
1 year ago
User 2: That's a significant amount of savings!
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Reena
1 year ago
User 1: The money market hedge saves GBP15,196
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Barrett
1 year ago
GBP32,078 saved with the money market hedge? That's a pretty hefty amount. I wonder if there's a catch.
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Crista
1 year ago
I agree, it's important to weigh the pros and cons of each option carefully.
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Jess
1 year ago
True, we should consider all factors before making a decision.
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Denae
1 year ago
Yeah, but we should also consider any potential risks involved.
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Socorro
1 year ago
But what if there are hidden costs or risks involved with the money market hedge?
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Joanna
1 year ago
It does seem like a significant saving with the money market hedge.
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Ines
1 year ago
I think the money market hedge is the way to go. GBP32,078 in savings is hard to ignore.
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Cammy
1 year ago
Forward contract saves GBP2,629? Hmm, that seems too low. I better review the exchange rates again.
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Rebecka
1 year ago
The money market hedge saves GBP15,196? I'm not convinced. Let's double-check the calculations.
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Boris
1 year ago
I'm not sure, but I think the money market hedge saves GBP32,078.
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Gilma
1 year ago
I disagree, I believe the forward contract saves GBP2,629.
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Sanda
1 year ago
I think the money market hedge saves GBP15,196.
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