CIMA Exam CIMAPRA19-P03-1 Topic 4 Question 53 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 53
Topic #: 4

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.

ARisk reports can change behaviour

BRisk reporting is a bad thing

CThe board may be concerned it will be criticised if it does not hedge

DThe board does not want to be blamed for ignoring a risk.

ERisk reporting drives the whole risk management process

Show Suggested Answer

Suggested Answer: A, C, D

by Bettye at Aug 23, 2024, 08:15 PM

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Dominque

2 months ago

I love how the board is treating this like a game of 'risk' - they're just rolling the dice and hoping they don't get caught. Hedging is for the faint of heart, am I right?

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Glory

1 months ago

I agree, it seems like the board is taking a gamble by not actively hedging. They should definitely take the risk reports seriously.

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Nenita

1 months ago

E) Risk reporting drives the whole risk management process

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Pansy

1 months ago

C) The board may be concerned it will be criticised if it does not hedge

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Cheryll

2 months ago

A) Risk reports can change behaviour

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Ming

3 months ago

E is the correct answer, because risk reporting is what drives the entire risk management process. But let's be honest, the board is probably just trying to cover their butts.

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Shawna

2 months ago

It's true, risk reporting drives the whole risk management process. The board needs to take action to mitigate any potential risks.

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Timothy

2 months ago

I agree, the board is most likely just trying to avoid any potential blame for not actively hedging currency risks.

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Nohemi

2 months ago

E is definitely the correct answer. Risk reporting is crucial for managing risks effectively.

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Felix

3 months ago

D and C seem to be the most relevant here. The board doesn't want to be blamed for ignoring a risk, and they're probably worried about criticism if they don't hedge.

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Deandrea

3 months ago

Risk reporting is important, but sometimes it can be used to drive the wrong kind of behavior. Looks like the board is more concerned about how they'll be perceived than actually managing the risk.

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Lino

2 months ago

The board does not want to be blamed for ignoring a risk.

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Nancey

2 months ago

Risk reports can change behaviour.

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Rima

2 months ago

The board may be concerned it will be criticised if it does not hedge.

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Dorthy

3 months ago

I believe risk reporting drives the whole risk management process, so the board should listen to the treasurer's advice.

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Cheryl

3 months ago

The board is clearly trying to cover their bases here. It's like they're saying, 'Hey, we know there's a risk, but we don't want to actually do anything about it. Let's just make it look like we're doing something.'

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