Updated Jan-2022 Exam Engine for P3 Exam Free Demo & 365 Day Updates
Exam Passing Guarantee P3 Exam with Accurate Quastions!
NEW QUESTION 105
QAW is a quoted building company QAW has detailed rules relating to the wording of its contracts and the need to seek Board approval for any changes to the standard wording The Convener of the Audit Committee has just received a copy of an internal audit report relating to the QAW Land Reclamation subsidiary The subsidiary has signed several construction contracts over the past two years that have made significant changes to the standard wording, with no attempt to seek approval from QAW's Board The internal audit report quotes the manager in charge of QAW Land Reclamation as refusing to accept that there is a compliance error at the subsidiary The manager stated that the nature of the business done by QAW Land Reclamation would make it inappropriate to use the standard contract terms and that it would be impractical to seek permission for every one of the many changes that are necessary Which of the following would be an appropriate response to this item by QAW's Board?
- A. The Audit Committee should treat this as an internal matter that should be dealt with by the management team of QAW's Land Reclamation.
- B. The Audit Committee should seek an indication of the number of contracts with non-standard conditions are still in effect before deciding how to act.
- C. The Audit Committee should disregard the point because an explanation has been offered by the manager in charge of QAW Land Reclamation.
- D. QAW's Director of Legal Affairs should investigate the matter and. if necessary, develop suitable standard contracts for QAW Land Reclamation.
Answer: B
NEW QUESTION 106
Multinational companies have a variety of methods by which to manage currency risk.
Select ALL internal hedging methods from the following list.
- A. Forward contracts
- B. Leading and lagging
- C. Matching
- D. Money market hedge
- E. Pooling
- F. Invoice in home currency
Answer: B,C,E,F
NEW QUESTION 107
There are many method for appraising capital projects.
Select ALL correct statements.
- A. Net Present Value evaluation considers a range of different discount rates considering different risk factors and finance methods.
- B. The time value of money should be the same for all similar competing projects.
- C. Decisions should only consider the financial implications of the project.
- D. All projects should be evaluated using sensitivity analysis.
- E. Opportunity cost is only relevant when capital is scarce.
- F. No one method of capital appraisal taken alone is adequate to evaluate competing projects.
Answer: A,B,F
NEW QUESTION 108
L is a specialist deep sea diving company The company specialises in challenging tasks that are often rejected by other companies as being too risky Most assignments are difficult and some are very dangerous L has very experienced divers who are highly trained and are safety conscious In spite of the dangerous work, L has an excellent success rate and is highly sought after L charges very high fees for its work Despite L's precautions, the likelihood of accidents is high and the consequences are also high L has an excellent insurance which has always been very expensive but the price has just been increased by 40% Which of the following is correct?
- A. L should diversify into low risk diving contract s.
- B. L should pay the very high insurance premiums demanded by its insurance company
- C. L should cease trading
- D. L should stop accepting these risky contracts.
Answer: A
NEW QUESTION 109
P Ltd, a manufacturing company, is considering a new capital investment project to set up a new production line. The initial appraisal shows a healthy net present value of $6,465 million at a discount rate of 10% as shown in the table below:
However, management is unsure about the demand for the product which will be produced and has insisted that the future revenues should be reduced to certainity equivalents by taking 70%, 65% and 60% of the years
1,2, and 3 cash inflows respectively.
What should P do?
- A. Proceed with the project, it has a healthy net present value.
- B. Re-appraise the project using other capital appraisal techniques to get a more balanced view.
- C. Put pressure on sales and marketing to re-verify their forecasts.
- D. Stop the project, it has considerable risk.
Answer: B
NEW QUESTION 110
As part of risk assessment exercise for a low-cost airline you are requested to match the risks listed below with the most approriate method of minimising or dealing with each risk.
Answer:
Explanation:
NEW QUESTION 111
Select the most appropriate level of responsibility for managing each of the following risks.
Answer:
Explanation:
NEW QUESTION 112
Match the descriptions shown in the boxes below with the method of quantifying risk exposure it best describes.
Answer:
Explanation:
NEW QUESTION 113
YHU manufactures flour from wheal (hat it purchases from wheat wholesalers who buy the gram in bulk from farmers around the world and import it to YHU's home country.
YHU sells its flour as "organic and free from genetically modified grain" It is difficult to test wheat to ensure that it is organic and impossible to prove that it has not been obtained from genetically modified crops YHU must trust its wholesalers to check the provenance of the wheat that they buy for resale to YHU.
Without YHU's knowledge, a consignment of wheat that it has used to make flour was purchased from a farmer who used genetically modified seed. The wholesaler made an error in tracking this consignment through its inventory system and sold it to YHU as organic and free from genetically modified gram Which TWO of the following are correct?
- A. YHU's total risk is affected by both the risk that the flour was incorrectly labelled and that the company was unaware of that fact
- B. If YHU admits to this error then there is a strong risk that customers will take legal action for being sold a dangerous product and that the courts will find in the customers' favors.
- C. YHU should ignore the interaction between risk factors when considering its response to the possibility of mislabelled ingredients
- D. The risk of YHU discovering this error is minimal because the wholesaler will both have to realise its mistake and be willing to admit to it.
- E. YHU could easily eliminate the risks associated with such errors by putting a prominent warning on its flour bags that they may contain flour made from non-organic or genetically modified flour.
Answer: A,B
NEW QUESTION 114
K plc is a large listed company in the retail industry. It has recently appointed T as a non-executive director. T has never had any previous involvement with K plc but is well known to K's Chief Executive P because T is the Managing Director of K plc's largest supplier.
K has recently expanded into Asia. Doubts about the wisdom of the move have been expressed in the financial press with some journalists commenting that it has exposed K plc to higher degrees of risk than previously.
The move had been approved by the Risk Committee which consists of four Non-Executive Directors (NEDs) all of whom have significant experience in business.
K plc does not have a Nominations Committee. Nominations to the Board are usually proposed by P and generally agreed by the other directors.
In relation to the above scenario which of the following comments is valid?
- A. The Risk Committee should have rejected the proposal to enter the Asian market merely because it exposed K to greater risk than the other markets in which it operates.
- B. K plc is in line with best practice as it only has NEDs on its Risk Committee.
- C. The absence of a Nominations Committee exposes K plc to the risk that the Chief Executive may have unfettered power.
- D. There is no possible conflict of interest in relation to T's position as a NED and as Managing Director of a supplier company since, in both roles, he would clearly want K plc to prosper.
Answer: C
NEW QUESTION 115
COM is a well established company in the construction industry The company was founded by the Mac family
30 years ago and several family members still serve on the Board The company obtained a listing five years ago The Board has an appropriate balance between executive and non-executive members It also has audit remuneration and nomination committees The average age of board members is 68 COM is profitable but profit margins have been falling steadily and this year's revenues are lower than it was achieved last year The Board recognis thai it does not have a long term strategy in place and has been losing business to newer, more aggressive competitors Which THREE of the following statements are correct?
- A. The nomination committee should be operating for the benefit of the directors.
- B. The non-executive directors should have challenged the lack of long term strategic planning
- C. The remuneration committee should consider incentives such as share options to encourage the Board to focus on COM's long term strategy
- D. The nomination committee should have had a succession plan in place for directors.
- E. The audit committee should have alerted the Board to the impact of falling profit margins
Answer: B,C,D
NEW QUESTION 116
Which of the following are true of an effective risk management culture?
- A. Risk management should be regarded as part of the overall business strategy.
- B. Staff should be penalised for being associated with negative events.
- C. Responsibility for risk management should be devolved to a risk manager.
- D. All staff should be aware of risks affecting the entity.
- E. The directors should take an active interest in risk management.
- F. All risk should be eliminated.
Answer: A,D,E
NEW QUESTION 117
Will owns $400,000 of shares in Company X.
Company X has a daily volatility of 1% of its share price.
Calculate the 28 day value at risk that shows the most Will can expect to lose during a 28 day period.
(Will wishes to be 90% certain that the actual loss in any month will be less than your predicted figure).
Give your answer to the nearest $000.
Answer:
Explanation:
$27
NEW QUESTION 118
XYZ is a large supermarket chain which has engaged in online shopping and home delivenes It has a 24/7 service which runs on a central server allowing its customers to input orders at any time XYZ runs a card loyalty scheme which is hosted on the central server All transactions, whether shop based or on-line, create an update on the central database on the central server Which THREE of the following types of Personally Identifiable Information (Pll) will XYZ have to hold for its customers?
- A. Credit card details
- B. Name
- C. Address
- D. Date of Birth
- E. XYZ Customer identification
Answer: A,B,C
NEW QUESTION 119
M plc has a $2 million loan outstanding on which the interest rate is reset every 6 months for the following 6 months and the interest is payable at the end of that 6-month period. The next 6-monthly reset period starts in
3 months and the treasurer of M plc thinks that interest rates are likely to rise between now and then.
Current 6-month rates are 7.2% and the treasurer can get a rate of 7.7% for a 6-month forward rate agreement (FRA) starting in 3 months' time. By transacting an FRA the treasurer can lock in a rate today of 7.7%.
If interest rates are 8.5% in 3 months' time, what will the net amount payable be?
Give your answer to the nearest thousand dollars.
Answer:
Explanation:
$77000
NEW QUESTION 120
With regard to the rote of the audit committee which of the following statements are correct? Select ALL that apply
- A. The audit committee should design the system of internal controls
- B. The audit committee should review and monitor the effectiveness of the company's internal audit function
- C. The audit committee should engage consultants to carry out business reviews
- D. The audit committee should decide annually whether it needs an internal audit function
- E. The audit committee should decide annually whether it needs an external audit function
- F. The audit committee should provide arrangements for whistle blowing
Answer: B,C,F
NEW QUESTION 121
Systems Development Lifecycle (SDLC) is used to manage risk within the development of new computer systems.
Which THREE of the following are appropriate controls to manage risk within the SDLC Process?
- A. When designing the new system, controls must be put in place to ensure that all the functionalities of the old system are replicated.
- B. When developing the new system, the developers must follow defined programming standards and carry out component test to specified test harness outputs.
- C. The Post Completion Review should take place immediately after the implementation while all the facts are still fresh in everyone's minds.
- D. When planning the new system, a clear business case must be approved specifying functionality, data transformation, expected costs and benefits.
- E. When the implementation of the new system is taking place, parallel running must be undertaken to ensure the output for the new system exactly matches that from the old system.
- F. When doing the analysis for the new system particular care should be taken over the data specification, transformation and manipulation, ensuring that expected outputs are defined and that such output meets the needs and expectations of the business users.
Answer: B,D,F
NEW QUESTION 122
......
Exam Questions for P3 Updated Versions With Test Engine: https://www.updatedumps.com/CIMA/P3-updated-exam-dumps.html
Test Engine to Practice Test for P3 Valid and Updated Dumps: https://drive.google.com/open?id=1ZloQ6b_qY0N-QEYJjlS5cW43DonK_llk