CIMA Exam CIMAPRO19-P03-1 Topic 5 Question 58 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 58
Topic #: 5

VBN's home currency is the V$. On 1 January, VBN must make a payment of C$2 million on 31 March of that same year.

On 1 January the spot exchange rate was V$1 = C$0.4.

On 1 January VBN paid $180,000 for a call option to buy C$2 million for V$5.5 million on 31 March. VBN's cost of borrowing was 8% per year.

On 31 March the spot rate was V$1 = C$0.45.

What was the total cost, including the cost of the option, of settling the payable?

AV$4.628 million

BV$5.684 million

CV$4.444 million

DV$5.5 million

Show Suggested Answer

Suggested Answer: B, C, D

by Andra at Dec 08, 2023, 10:03 AM

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Jesusita

2 months ago

I wish they'd ask about something more exciting, like the latest celebrity gossip. This is just boring finance stuff.

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Melinda

12 days ago

I'm pretty sure it's C) V$4.444 million.

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Ora

16 days ago

No, I believe it's B) V$5.684 million.

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Willow

18 days ago

I think the answer is A) V$4.628 million.

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Stephanie

2 months ago

Okay, let's see... I just need to crunch the numbers and figure out the best option. No biggie, right? *sweats profusely*

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Nicholle

2 months ago

Ha! This is like a currency exchange puzzle. I bet the answer is hidden in all those numbers and dates.

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Ariel

27 days ago

User 3: The answer must be one of the options provided, let's do the math.

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Ben

1 months ago

User 2: Yes, we have to consider the spot exchange rates and the cost of the option.

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Daniel

1 months ago

User 1: I think we need to calculate the total cost including the option.

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Rima

2 months ago

Ugh, why do they always make these questions so complicated? I just want a simple, straightforward answer.

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Kris

2 months ago

Hmm, this question seems a bit tricky. I'll need to carefully calculate the exchange rates and the cost of the option to determine the total cost.

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Julian

27 days ago

User 2: Yes, we should consider the spot exchange rate and the cost of borrowing as well.

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Chun

28 days ago

User 1: I think we need to calculate the total cost including the cost of the option.

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Gayla

1 months ago

User 2: Yes, we should consider the spot exchange rates and the cost of borrowing as well.

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Beata

1 months ago

User 1: I think we need to calculate the total cost including the cost of the option.

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Maile

2 months ago

But the cost of the option was $180,000, so the total cost should be lower than that. That's why I chose A.

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Olive

3 months ago

I disagree, I believe the answer is B) V$5.684 million.

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Maile

3 months ago

I think the answer is A) V$4.628 million.

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