CIMA Exam CIMAPRA19-F03-1 Topic 3 Question 88 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 88
Topic #: 3

[All CIMAPRA19-F03-1 Questions]

Which THREE of the following statements are true of a money market hedge?

AThey offer roughly the same outcome as a forward contract.

BThey leave the company exposed to currency risks.

CThey may be a little more flexible in comparison to a forward contract.

DThey are more complex than forward contracts.

EThey are easy to set up.

Show Suggested Answer

Suggested Answer: A, B, D

by Lyda at May 30, 2024, 07:00 PM

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Tomoko

8 months ago

I'm not sure about the 'exposed to currency risks' part. Isn't the whole point of a money market hedge to hedge against currency risks?

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Sharan

8 months ago

Haha, 'easy to set up'? Not a chance! This option is definitely not true. Setting up a money market hedge is anything but easy.

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Cyril

7 months ago

B) They leave the company exposed to currency risks.

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Nettie

7 months ago

C) They may be a little more flexible in comparison to a forward contract.

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Karma

8 months ago

A) They offer roughly the same outcome as a forward contract.

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Scot

8 months ago

I disagree with Casie, I believe statement B is true, money market hedges do leave the company exposed to currency risks.

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Stefan

8 months ago

I agree with Jacki. The money market hedge is a bit more complex than a forward contract, but the flexibility it provides can be useful in certain situations.

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Jacki

8 months ago

A, C, and D seem to be the correct statements. The money market hedge does offer similar outcomes to a forward contract, but with some additional flexibility.

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