CIPS Exam L5M2 Topic 1 Question 35 Discussion

Actual exam question for CIPS's L5M2 exam

Question #: 35
Topic #: 1

[All L5M2 Questions]

Maple Tree Limited is a Canadian company who has recently signed a new contract with a supplier who is based in Chin

a. Maple Tree Limited will be buying a raw material with a reputation for severe price fluctuations. Which of the following would help mitigate the risk that this poses? Select TWO options

Aquote in the supplier's currency

Bquote in the buyer's currency

Cuse a forward exchange contract

Dfix the exchange rate at the current rate

Show Suggested Answer

Suggested Answer: A

The correct answers are as follows:

CSR= Corporate Social Responsibility

by Lauran at Jun 20, 2024, 07:05 AM

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Muriel

28 days ago

I'd recommend C and D. Seriously, who wants to gamble with raw material prices? Might as well just roll the dice and hope for the best. But that's not how you win at business, am I right?

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Goldie

1 months ago

I'm going to have to go with C and D. Fixing the exchange rate and using a forward contract - that's the way to play it safe in this situation. No need to get fancy, just lock it down.

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Yvette

2 days ago

I agree, using a forward exchange contract and fixing the exchange rate seems like the safest option.

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Lisandra

1 months ago

I'd go with C and B. Quoting in the buyer's currency could also help stabilize the costs, especially if the supplier's currency is volatile.

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Cecilia

1 months ago

Definitely C - a forward exchange contract! That way, you can agree on a fixed rate upfront and avoid any nasty surprises later on.

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Edelmira

7 days ago

I would go with both A) quote in the supplier's currency and C) use a forward exchange contract to cover all bases.

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Tashia

11 days ago

I think fixing the exchange rate at the current rate could also be helpful in this situation.

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Gracia

22 days ago

I agree, using a forward exchange contract is a good way to mitigate the risk of price fluctuations.

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Candra

2 months ago

Hmm, I think C and D would be the best options to mitigate the risk of price fluctuations. Locking in the exchange rate is a smart move.

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Rene

1 months ago

Yes, those options would provide some stability in the face of price fluctuations.

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Ellsworth

2 months ago

I agree, using a forward exchange contract and fixing the exchange rate would definitely help manage the risk.

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Cassi

2 months ago

I think fixing the exchange rate at the current rate would be the best option to avoid any surprises.

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Bettye

2 months ago

I agree with Raelene, but we should also use a forward exchange contract for added protection.

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Raelene

2 months ago

I think we should quote in the supplier's currency to mitigate the risk.

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