CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 84 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 84
Topic #: 1

[All CIMAPRA17-BA1-1 Questions]

Which of the following describes the effect an interest rate rise may have on a company?

APrices will have to increase due to increased inflationary pressures

BSales will increase as consumers have stable incomes in the short term.

CThe cost of financing projects through loans will increase

DThe cost of holding stock will reduce

Show Suggested Answer

Suggested Answer: C

by Ryan at Apr 11, 2024, 03:34 AM

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Jani

2 days ago

C) The cost of financing projects through loans will increase

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Wenona

24 days ago

Haha, yeah right. Stable incomes in the short term? Good one. With interest rates rising, I doubt consumers will be feeling too stable or eager to spend money.

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Chi

26 days ago

Hold up, what about option B? If consumers have stable incomes in the short term, that could actually increase sales for companies, right? Wouldn't that be a positive outcome?

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Elvera

27 days ago

Hmm, that's a good point. But I think option C is still the most direct and significant impact of an interest rate rise. Increased financing costs are harder to offset than just raising prices.

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Refugia

28 days ago

I'm not so sure. What about option A? Increased inflationary pressures could also force companies to raise their prices, which could have a significant impact on their operations and profitability.

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I agree with Sunshine. Option C is definitely the right answer here. Higher interest rates mean higher borrowing costs for companies, which can really hurt their bottom line and ability to invest in growth.

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Sunshine

1 months ago

Hmm, this question seems pretty straightforward. I think the correct answer is C - the cost of financing projects through loans will increase. An interest rate rise will make it more expensive for companies to borrow money, which will impact their ability to fund new projects and expansions.

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CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 84 Discussion

Contribute your Thoughts:

Jani

Wenona

Chi

Elvera

Refugia

Kasandra

Sunshine