CIPS L5M2 Exam - Topic 5 Question 64 Discussion

Actual exam question for CIPS's L5M2 exam

Question #: 64
Topic #: 5

[All L5M2 Questions]

Juan is a Spanish business owner who imports several parts from Japan. Juan's business operates in Euros and the parts that he buys from Japan can often take a long time to arrive, this means that the price of the items sometimes fluctuates due to the exchange rate. Which of the following would be the best option for Juan?

Ahave the supplier quote in their own currency

Bhave the supplier quote in Juan's currency

Chave the supplier match geographical profiles of customer sales with supplier purchases

Dterminate the contract with the foreign supplier

Show Suggested Answer

Suggested Answer: B

quoting in Juan's currency would reduce the risk to Juan - the risk of currency exchange rate fluctuations would then sit with the supplier. See p.23 for more information on currency risks.

by Alease at Nov 24, 2025, 11:04 PM

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Linn

15 hours ago

Not sure if option C is practical for Juan's situation.

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Mohammad

6 days ago

Fluctuating prices can really hurt profit margins.

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Darell

11 days ago

Wait, why would he terminate the contract? Seems drastic!

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Geraldine

16 days ago

Option B makes the most sense to avoid exchange rate issues.

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Xenia

21 days ago

Option C is interesting, but it might be too complex for Juan's business. B is the way to go.

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Shannon

26 days ago

Haha, terminating the contract with the foreign supplier? That's a bit extreme, don't you think?

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Jospeh

1 month ago

I agree, having the supplier quote in Juan's currency is the most practical solution.

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Merlyn

1 month ago

I’m not confident, but I think terminating the contract might be too drastic unless the supplier is really unreliable.

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Michel

1 month ago

This question reminds me of a similar practice one where we talked about currency risk management. I feel like option B could be a safer choice for Juan.

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Jade

2 months ago

Terminating the contract with the foreign supplier (option D) seems a bit drastic. There must be a way for Ahmed to manage the exchange rate risk without having to completely change suppliers. I think options A or B would be better solutions.

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Ahmed

2 months ago

I would definitely go with option B. Quoting in my own currency gives me more control and stability over the pricing of the parts I need to import. The exchange rate fluctuations can be a real headache, so this seems like the best way to avoid that.

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Macy

2 months ago

Option C sounds interesting, but I'm not sure how that would work in practice. Matching geographical profiles of customer sales with supplier purchases seems like it could be complicated to implement.

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Giovanna

2 months ago

Option B seems like the best choice. That way Juan can better manage the exchange rate risk.

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Emeline

2 months ago

I remember discussing how quoting in the supplier's currency could expose Juan to more exchange rate risk, but I'm not entirely sure if that's the best option.

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Marya

2 months ago

I think option B is best. It reduces risk.

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Barbra

3 months ago

I think having the supplier quote in Juan's currency might help stabilize costs, but I can't recall if there are any downsides to that approach.

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Clorinda

3 months ago

I disagree, quoting in their currency could save costs.

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Wei

3 months ago

I'm a bit confused by this question. It seems like there are a few different strategies Juan could use to manage the exchange rate risk. I'm not sure which one would be the "best" option.

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Lenita

3 months ago

I think option B would be the best choice for Juan. Having the supplier quote in his own currency would help him better manage the exchange rate risk and avoid fluctuations in the price of the parts.

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