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CIMA Exam CIMAPRO19-P03-1 Topic 4 Question 75 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 75
Topic #: 4
[All CIMAPRO19-P03-1 Questions]

JKL makes large export sales to customers in country X, whose currency fluctuates significantly against JKL's home currency JKL also makes large purchases from suppliers in countrrOC All of these transactions are in country X's currency

JKL's treasurer does not actively hedge currency risks because there is a natural hedge in place due to the company making both sales and purchases in the same currency

JKL's board has instructed the treasurer to put active hedging measures in place because the risk report would otherwise have to disclose the fact that JKL has a currency risk which is not actively hedged

Which of the following statements are correct? Select ALL that apply.

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

by Rosalia at Aug 28, 2024, 02:34 AM

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Delmy
3 months ago
I think the board does not want to be blamed for ignoring a risk, so they are right to instruct the treasurer to put active hedging measures in place.
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Dudley
3 months ago
I believe risk reports can change behavior, so it's crucial for the board to take action.
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Annmarie
3 months ago
C and D seem like the right answers here. The board wants to avoid any potential criticism or blame for not addressing a known risk.
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Claudio
3 months ago
Well, the board is just doing their job by ensuring currency risks are actively managed. Wouldn't want them to get in trouble for not being 'risk-aware' enough.
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Lorenza
3 months ago
C) The board may be concerned it will be criticised if it does not hedge
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Moira
3 months ago
A) Risk reports can change behaviour
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Santos
3 months ago
I agree with Beckie. Risk reporting is important for transparency.
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Janine
3 months ago
Hah, the board is worried about the optics of not hedging. Gotta love how risk management can be more about impression management sometimes.
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Carri
3 months ago
Risk reporting is essential for good governance, but it shouldn't be the sole driver of risk management. The board is just trying to be proactive here.
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Nichelle
3 months ago
C) The board may be concerned it will be criticised if it does not hedge
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Francesco
3 months ago
A) Risk reports can change behaviour
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Hermila
4 months ago
The board wants to cover their own backs by putting active hedging measures in place. I guess they don't want to be the scapegoats if something goes wrong.
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Kiera
3 months ago
D) The board does not want to be blamed for ignoring a risk.
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Frank
3 months ago
C) The board may be concerned it will be criticised if it does not hedge
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Galen
3 months ago
A) Risk reports can change behaviour
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Beckie
4 months ago
I think the board may be concerned it will be criticised if it does not hedge.
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