CIMA Exam CIMAPRO19-P03-1 Topic 6 Question 43 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 43
Topic #: 6

[All CIMAPRO19-P03-1 Questions]

Kis a manufacturing company. It has sourced new equipment from the US to equip a new production facility.

It has to make a payment of USD1,000,000 in3 months' time.

K's production manager needs to know whether it is cheaper to use a forward contract or a money market hedge.

Current spot and forward exchange rates are as follows:

Current mid-point money market rates (annual) are as follows:

Ignoring taxation, which of the following statements is correct?

AThe money market hedge saves GBP15,196

BThe forward contract saves GBP2,629

CThe money market hedge saves GBP32,078

DThe forward contract saves GBP1,901

Show Suggested Answer

Suggested Answer: A, B, D

by Tiffiny at Dec 24, 2022, 10:40 AM

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2 days ago

I'm not sure, but I think the money market hedge saves GBP32,078.

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3 days ago

I disagree, I believe the forward contract saves GBP2,629.

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4 days ago

I think the money market hedge saves GBP15,196.

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