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

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 101
Topic #: 5

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?

AG 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.

BG's strategy is to ensure that its interest rates lie between 8.5% and 10.0%.

CG is concerned that interest rates may rise above 10.0%.

DG is concerned that interest rates may rise above 8.5%.

EG is concerned that interest rates may fall below 10%.

Show Suggested Answer

Suggested Answer: A, B, C

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

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Velda

29 days 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

30 days 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

10 days ago

E) G is concerned that interest rates may fall below 10%.

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Herschel

12 days ago

D) G is concerned that interest rates may rise above 8.5%.

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Jonelle

15 days ago

C) G is concerned that interest rates may rise above 10.0%.

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Margo

1 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

12 days ago

C) G is concerned that interest rates may rise above 10.0%.

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Britt

20 days ago

B) G's strategy is to ensure that its interest rates lie between 8.5% and 10.0%.

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Cassie

26 days 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

1 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

15 days ago

C) G is concerned that interest rates may rise above 10.0%.

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Lynna

21 days ago

B) G's strategy is to ensure that its interest rates lie between 8.5% and 10.0%.

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Nydia

24 days 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

1 months ago

I agree. It seems like G is being cautious with their options.

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Jillian

1 months ago

Yeah, that makes sense. They probably want to cap their losses.

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Fausto

1 months ago

I think G is trying to protect against interest rates going too high.

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Vicki

2 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

26 days ago

E) G is concerned that interest rates may fall below 10%.

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Myra

28 days ago

C) G is concerned that interest rates may rise above 10.0%.

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Jettie

30 days 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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