CIMA Exam CIMAPRO19-P03-1 Topic 6 Question 43 Discussion

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

Question #: 43
Topic #: 6

[All CIMAPRO19-P03-1 Questions]

Kis a manufacturing company. It has sourced new equipment from the US to equip a new production facility.

It has to make a payment of USD1,000,000 in3 months' time.

K's production manager needs to know whether it is cheaper to use a forward contract or a money market hedge.

Current spot and forward exchange rates are as follows:

Current mid-point money market rates (annual) are as follows:

Ignoring taxation, which of the following statements is correct?

AThe money market hedge saves GBP15,196

BThe forward contract saves GBP2,629

CThe money market hedge saves GBP32,078

DThe forward contract saves GBP1,901

Show Suggested Answer

Suggested Answer: A, B, D

by Tiffiny at Dec 24, 2022, 10:40 AM

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Sharee

7 days ago

The forward contract saves GBP1,901? That's pocket change! I hope the other options are more substantial.

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Barrett

17 days ago

GBP32,078 saved with the money market hedge? That's a pretty hefty amount. I wonder if there's a catch.

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Cammy

18 days ago

Forward contract saves GBP2,629? Hmm, that seems too low. I better review the exchange rates again.

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Rebecka

19 days ago

The money market hedge saves GBP15,196? I'm not convinced. Let's double-check the calculations.

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Boris

22 days ago

I'm not sure, but I think the money market hedge saves GBP32,078.

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Gilma

23 days ago

I disagree, I believe the forward contract saves GBP2,629.

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Sanda

24 days ago

I think the money market hedge saves GBP15,196.

upvoted 0 times

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