CIMA Exam CIMAPRO19-P03-1 Topic 6 Question 41 Discussion

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

Question #: 41
Topic #: 6

An oil company has entered into a joint venture with a competing oil company to develop a new oil field. The joint venture arrangement is intended to mitigate the risks associated with developing the oil field.

The following disclosure appears in the oil company's risk report:

"Many of our large projects and operations are conducted through joint ventures. These arrangements involve complex risk allocation and indemnification arrangements and we have less control over these activities than we would have if we had full ownership and control. Our partners may have economic or business interests that are opposed to ours, and may exercise the right to block key decisions or actions.We believe the joint arrangement is in our best interest."

Which of the following statements are correct?

AThe risk report means that the shareholders know exactly how bad the risk is.

BThe risk report says nothing useful about the risk.

CNow the shareholders know the directors are aware of the risk.

DIf the risk report had not reported the risk the shareholders might not have been aware of the risk.

EThe shareholders now have more useful information.

Show Suggested Answer

Suggested Answer: A, B, D

by Merlyn at Nov 16, 2022, 11:51 AM

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21 days ago

I think the risk report is important for shareholders to know about the risks involved in joint ventures.

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