CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 84 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 84
Topic #: 1

[All CIMAPRA17-BA1-1 Questions]

Which of the following describes the effect an interest rate rise may have on a company?

APrices will have to increase due to increased inflationary pressures

BSales will increase as consumers have stable incomes in the short term.

CThe cost of financing projects through loans will increase

DThe cost of holding stock will reduce

Show Suggested Answer

Suggested Answer: C

by Ryan at Apr 11, 2024, 03:34 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRA17-BA1-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Juliann

5 months ago

I see your point, but I still think option C is the most accurate. It directly relates to the cost of financing projects through loans.

upvoted 0 times

...

Elden

5 months ago

That's an interesting point. Higher interest rates can indeed lead to increased inflation, impacting pricing strategies.

upvoted 0 times

...

Long

6 months ago

I'm not so sure. I think option A could also be correct because higher interest rates may lead to increased inflation, causing companies to raise prices.

upvoted 0 times

...

Juliann

6 months ago

I agree with Candidate 1. Option C makes sense because companies will have to pay more interest on any loans they take out.

upvoted 0 times

...

Elden

6 months ago

I think the answer is C because higher interest rates mean higher costs for companies taking out loans.

upvoted 0 times

...

Rebecka

6 months ago

I agree with Beata. Higher interest rates can lead to higher costs for companies looking to finance projects.

upvoted 0 times

...

Beata

6 months ago

I think C is the correct answer because when interest rates rise, borrowing money becomes more expensive.

upvoted 0 times

...

Cristina

6 months ago

D) The cost of holding stock will reduce

upvoted 0 times

...

Elinore

7 months ago

A) Prices will have to increase due to increased inflationary pressures

upvoted 0 times

...

Jani

7 months ago

C) The cost of financing projects through loans will increase

upvoted 0 times

...

Wenona

8 months ago

Haha, yeah right. Stable incomes in the short term? Good one. With interest rates rising, I doubt consumers will be feeling too stable or eager to spend money.

upvoted 0 times

...

Chi

8 months ago

Hold up, what about option B? If consumers have stable incomes in the short term, that could actually increase sales for companies, right? Wouldn't that be a positive outcome?

upvoted 0 times

...

Elvera

8 months ago

Hmm, that's a good point. But I think option C is still the most direct and significant impact of an interest rate rise. Increased financing costs are harder to offset than just raising prices.

upvoted 0 times

...

Refugia

8 months ago

I'm not so sure. What about option A? Increased inflationary pressures could also force companies to raise their prices, which could have a significant impact on their operations and profitability.

upvoted 0 times

...

I agree with Sunshine. Option C is definitely the right answer here. Higher interest rates mean higher borrowing costs for companies, which can really hurt their bottom line and ability to invest in growth.

upvoted 0 times

...

Sunshine

8 months ago

Hmm, this question seems pretty straightforward. I think the correct answer is C - the cost of financing projects through loans will increase. An interest rate rise will make it more expensive for companies to borrow money, which will impact their ability to fund new projects and expansions.

upvoted 0 times

Oneida

7 months ago

I don't think so, because inflation and interest rates are not the same thing

upvoted 0 times

...

Jose

7 months ago

But wouldn't A also be true, as prices often increase with inflation?

upvoted 0 times

...

Carry

7 months ago

I agree with you, C is the correct answer

upvoted 0 times

...

CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 84 Discussion

Contribute your Thoughts:

Juliann

Elden

Long

Juliann

Elden

Rebecka

Beata

Cristina

Elinore

Jani

Wenona

Chi

Elvera

Refugia

Kasandra

Sunshine

Oneida

Jose

Carry