CIPS L4M4 Exam - Topic 3 Question 7 Discussion

Actual exam question for CIPS's L4M4 exam

Question #: 7
Topic #: 3

[All L4M4 Questions]

Philip is a procurement manager at XYZ Company which imports raw materials from abroad. Sup-pliers provide quotes to Philip in their local currency. Is this the best way to reduce the risk to XYZ Company of currency fluctuations?

Ayes- this means the price won't go up or down

Byes- this puts the risk on the supplier

Cno- quoting in the supplier's currency increases the risk for the buyer

Dno- quoting in the supplier's currency does not affect the risk to the buying organisation

Show Suggested Answer

Suggested Answer: C

The correct answer is 'no- quoting in the supplier's currency increases the risk for the buyer'. This questions comes up in a variety of formats in the exam. Remember; if the price is in your own currency (most examples in the exam are given in ) there is less risk than if the prices are quoted in a foreign currency. This is because exchange rates fluctuate; if the price is in you always know what you're paying, if it's in another currency the price can change daily depending on if the exchange rate compared to has gone up or down.

by Glendora at Apr 12, 2024, 09:33 PM

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Vilma

3 months ago

I thought it would stabilize prices, but now I'm not so sure.

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Cassandra

3 months ago

Definitely not the best way to manage currency risk!

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Eugene

3 months ago

Wait, isn't it risky for us if the currency fluctuates?

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Tequila

4 months ago

I think it actually shifts the risk to the supplier, right?

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Annabelle

4 months ago

Quoting in local currency can lead to more unpredictable costs.

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Shelton

4 months ago

I thought quoting in the supplier's currency was risky for the buyer, but I can't recall the exact details from my notes.

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Olive

4 months ago

I'm not entirely sure, but I feel like if the supplier quotes in their currency, it might shift the risk away from the buyer.

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Alison

4 months ago

I think I practiced a question similar to this, and it suggested that having quotes in the buyer's currency might be safer.

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Dalene

5 months ago

I remember discussing how quoting in the supplier's currency could actually expose the buyer to more risk, especially if the exchange rates fluctuate.

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Wilda

5 months ago

This question is testing our understanding of currency risk management. I'll need to carefully weigh the pros and cons of the different options to determine the best approach for the buyer.

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Agustin

5 months ago

I'm pretty confident I know the answer to this one. Quoting in the supplier's currency actually increases the risk for the buyer, so that's not the best way to reduce currency risk.

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Tomas

5 months ago

Okay, I think I've got a handle on this. The key is to consider who bears the risk of currency fluctuations when the supplier quotes in their local currency.

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Jackie

5 months ago

Hmm, I'm a bit confused on this one. I'll need to review the concepts around currency risk and how that impacts the buyer versus the supplier.

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Dino

5 months ago

This seems like a tricky one. I'll need to think carefully about the risks involved in currency fluctuations and how that affects the buyer.

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Golda

5 months ago

Okay, I think the key here is making sure the information gathered is accurate and consistent with other sources. That's why option D seems like the best choice.

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Lindsey

5 months ago

Option C looks sketchy - saying someone is 'most likely' guilty isn't professional language for a forensic report.

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Chery

5 months ago

Okay, I think I've got this. The key is to split the mirror, remove the disk, and then mount it under a new file system. Option D looks like the right approach, but I'll verify the steps before submitting.

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Werner

5 months ago

This seems like a straightforward question about project management knowledge areas. I'll review my notes on the human resource management knowledge area to identify the correct answer.

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Colton

2 years ago

Yes, it's the best way to reduce the risk for XYZ Company.

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Stefania

2 years ago

So, should Philip continue to ask for quotes in the supplier's local currency?

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Frederick

2 years ago

I believe quoting in the supplier's currency does not affect the risk to the buying organization.

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Estrella

2 years ago

That's true, but it puts all the risk on the supplier.

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Yesenia

2 years ago

But doesn't it also mean the price won't go up or down, decreasing uncertainty?

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Martha

2 years ago

I think quoting in the supplier's currency increases risk for XYZ Company.

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Benedict

2 years ago

I see your point, Putting the risk on the supplier could protect XYZ Company from currency fluctuations.

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Lindsey

2 years ago

But wouldn't shifting the risk to the supplier be better? That's what option B suggests.

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Billye

2 years ago

I agree with it makes sense that the risk would be higher if the quote is in the supplier's currency.

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Peggie

2 years ago

I think quoting in the supplier's currency increases the risk for the buyer.

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Raymon

2 years ago

Whoa, hold on a minute. Didn't we just establish that quoting in the supplier's currency could increase the risk? I'm pretty sure option C is the correct answer here.

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Kirk

2 years ago

You know, I'm starting to think option D might be the way to go. If quoting in the supplier's currency doesn't affect the risk, then that might be the simplest and most straightforward approach.

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Kathrine

2 years ago

Actually, option C makes sense. It's better to avoid currency fluctuations.

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Jerlene

2 years ago

But won't quoting in the supplier's currency increase the risk for the buyer?

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Lenna

2 years ago

I think option D is a safe choice.

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Richelle

2 years ago

Hold up, are we sure option A is right? I mean, just because the price won't go up or down doesn't mean the risk is eliminated. Currency fluctuations could still have a big impact on the bottom line.

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Zachary

2 years ago

Hmm, I'm not so sure. Couldn't quoting in the supplier's currency help the buying organization hedge against currency fluctuations? That's what option A seems to be implying.

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Daniel

2 years ago

I agree, it's not as straightforward as it seems. Quoting in the supplier's currency could actually increase the risk for the buying organization, as option C suggests.

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Lawrence

2 years ago

I think this is a tricky question. On the surface, option B seems like the best choice since it puts the risk on the supplier. But I'm not sure that's the full story here.

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