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?

AThe money market hedge saves GBP15,196

BThe forward contract saves GBP2,629

CThe money market hedge saves GBP32,078

DThe forward contract saves GBP1,901

Show Suggested Answer

Suggested Answer: A, B, D

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

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Lettie

2 months 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

8 days ago

Sounds good, let's hedge our bets with the forward contract.

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Gwenn

21 days ago

I agree, let's go with option B then.

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Clemencia

1 months ago

I think we should use the forward rate for the calculation.

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Sharee

2 months ago

The forward contract saves GBP1,901? That's pocket change! I hope the other options are more substantial.

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Lorrine

User 4: Yeah, that seems like a small amount compared to the money market hedge.

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Viki

2 days ago

User 3: The forward contract saves GBP1,901

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Rebeca

4 days ago

User 2: That's a significant amount of savings!

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Tamra

5 days ago

User 1: The money market hedge saves GBP15,196

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Dacia

7 days ago

User 4: Yeah, that seems like a small amount compared to the money market hedge.

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Coletta

12 days ago

User 3: The forward contract saves GBP1,901

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Arlette

27 days ago

User 2: That's a significant amount of savings!

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Reena

1 months ago

User 1: The money market hedge saves GBP15,196

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Barrett

2 months 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

30 days ago

I agree, it's important to weigh the pros and cons of each option carefully.

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Jess

1 months ago

True, we should consider all factors before making a decision.

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Denae

2 months ago

Yeah, but we should also consider any potential risks involved.

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Socorro

2 months ago

But what if there are hidden costs or risks involved with the money market hedge?

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Joanna

2 months ago

It does seem like a significant saving with the money market hedge.

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Ines

2 months 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

2 months ago

Forward contract saves GBP2,629? Hmm, that seems too low. I better review the exchange rates again.

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Rebecka

2 months ago

The money market hedge saves GBP15,196? I'm not convinced. Let's double-check the calculations.

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Boris

3 months ago

I'm not sure, but I think the money market hedge saves GBP32,078.

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Gilma

3 months ago

I disagree, I believe the forward contract saves GBP2,629.

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Sanda

3 months ago

I think the money market hedge saves GBP15,196.

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