BlackFriday 2024! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMA Exam CIMAPRA19-F03-1 Topic 6 Question 91 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 91
Topic #: 6
[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?

Show Suggested Answer Hide Answer
Suggested Answer: A, B, C

by Celeste at Jul 08, 2024, 09:30 PM

Limited Time Offer

25%

Off

Get Premium CIMAPRA19-F03-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel
Leonor
3 months ago
I'll go with A, C, and E. Gotta love these questions that test your understanding of basic options strategies. It's not rocket science, folks.
upvoted 0 times
Buffy
3 months ago
C) G is concerned that interest rates may rise above 10.0%.
upvoted 0 times
...
Cassandra
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.
upvoted 0 times
...
...
Leonora
3 months ago
Haha, G must be a real risk-taker. Selling a call option on top of buying a put? Sounds like a recipe for either big profits or big losses. No in-between!
upvoted 0 times
Blythe
2 months ago
D) G is concerned that interest rates may rise above 8.5%.
upvoted 0 times
...
Dell
2 months ago
B) G's strategy is to ensure that its interest rates lie between 8.5% and 10.0%.
upvoted 0 times
...
Alesia
2 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.
upvoted 0 times
...
...
Stevie
3 months ago
B is just silly. What kind of strategy is that? Trying to keep rates between 8.5% and 10%? Where's the upside in that?
upvoted 0 times
Von
3 months ago
D) G is concerned that interest rates may rise above 8.5%.
upvoted 0 times
...
Susy
3 months ago
C) G is concerned that interest rates may rise above 10.0%.
upvoted 0 times
...
Marjory
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.
upvoted 0 times
...
...
Adria
4 months ago
But G also sold a call option to benefit from a decrease in interest rates.
upvoted 0 times
...
Daren
4 months ago
I agree, that's why G purchased the put option.
upvoted 0 times
...
Georgeanna
4 months ago
I think G is trying to limit the cost of rises.
upvoted 0 times
...
Roxane
4 months ago
A, C, and E seem like the logical choices here. G is clearly trying to hedge against interest rate rises while still benefiting from decreases. Simple stuff really.
upvoted 0 times
Shantell
3 months ago
E) G is concerned that interest rates may fall below 10%.
upvoted 0 times
...
Misty
3 months ago
C) G is concerned that interest rates may rise above 10.0%.
upvoted 0 times
...
Tomas
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.
upvoted 0 times
...
Venita
4 months ago
C) G is concerned that interest rates may rise above 10.0%.
upvoted 0 times
...
Raina
4 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.
upvoted 0 times
...
...

Save Cancel