CIMA Exam CIMAPRA19-P03-1 Topic 4 Question 26 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 26
Topic #: 4

Zia is an accountant and wishes to take out a Forward Rate Agreement (FRA)as a hedging instrument. The company treasurer has advised that a short-term interest rate (STIR)future would be better.

Which of the following is true of an STIR?

AA STIR can be tailored to the exact needs of the company.

BA STIR is flexible and the position can be closed quickly and easily.

CA STIR must be kept for the whole duration of the contract.

DIf interest rates have gone down the price of the future will have fallen.

Show Suggested Answer

Suggested Answer: B, C, E

by Dean at Mar 28, 2023, 02:25 PM

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Cherry

14 days ago

I agree with Talia, B) A STIR being flexible is important for managing risk effectively.

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Talia

18 days ago

I disagree, I believe B) A STIR is flexible and the position can be closed quickly and easily.

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Clarence

23 days ago

I think A) A STIR can be tailored to the exact needs of the company.

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