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CIMA Exam CIMAPRA19-F03-1 Topic 5 Question 101 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 101
Topic #: 5
[All CIMAPRA19-F03-1 Questions]

G purchased a put option that grants the right to cap the interest on a loan at 10.0%. Simultaneously, G sold a call option that grants the holder the benefits of any decrease if interest rates fall below 8.5%.

Which THREE possible s would be consistent with G's behavior?

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Suggested Answer: A, B, C

by Wenona at Oct 18, 2024, 09:38 AM

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Velda
3 months ago
Hah, G must be a finance ninja, wielding those options like throwing stars! I'd say C, D, and E are the way to go. Gotta keep those rates in check, no matter what the market throws at you.
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Karl
3 months ago
What is this, a finance quiz or a magic trick? G must be a real wizard, juggling all these interest rate options. I'll go with C, D, and E - they're clearly hedging their bets like a pro.
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Ruthann
3 months ago
E) G is concerned that interest rates may fall below 10%.
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Herschel
3 months ago
D) G is concerned that interest rates may rise above 8.5%.
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Jonelle
3 months ago
C) G is concerned that interest rates may rise above 10.0%.
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Margo
4 months ago
Hmm, this is a tricky one. I'd go with C, D, and E. G is just playing it safe, trying to cover all their bases. Better safe than sorry, amirite?
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Nada
3 months ago
C) G is concerned that interest rates may rise above 10.0%.
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Britt
3 months ago
B) G's strategy is to ensure that its interest rates lie between 8.5% and 10.0%.
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Cassie
3 months ago
A) G is willing to risk the loss of savings from a fall in interest rates if that offsets the cost of limiting the cost of rises.
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Anthony
4 months ago
I'm going with B, C, and E. Gotta keep those interest rates in the sweet spot, you know? Can't have 'em too high or too low.
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Keneth
3 months ago
C) G is concerned that interest rates may rise above 10.0%.
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Lynna
3 months ago
B) G's strategy is to ensure that its interest rates lie between 8.5% and 10.0%.
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Nydia
3 months ago
A) G is willing to risk the loss of savings from a fall in interest rates if that offsets the cost of limiting the cost of rises.
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Man
4 months ago
I agree. It seems like G is being cautious with their options.
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Jillian
4 months ago
Yeah, that makes sense. They probably want to cap their losses.
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Fausto
4 months ago
I think G is trying to protect against interest rates going too high.
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Vicki
4 months ago
A, C, and E seem like the most reasonable options. G is trying to hedge against interest rate increases while still benefiting from decreases. Not a bad strategy!
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Herman
3 months ago
E) G is concerned that interest rates may fall below 10%.
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Myra
3 months ago
C) G is concerned that interest rates may rise above 10.0%.
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Jettie
3 months ago
A) G is willing to risk the loss of savings from a fall in interest rates if that offsets the cost of limiting the cost of rises.
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