Question 1

James owns a small company which sometimes suffers from credit risk.

Which of the following measures should he put in place to help reduce this risk?

Options :

A : Introduce credit checks for new customers.

B : Reduce the company bank loans.

C : Pay suppliers' invoices quicker.

D : Look for a loan with a lower interest rate.

Answer: A

Question 2

Zia is an accountant and wishes to take out a Forward Rate Agreement (FRA)as a hedging instrument. The company treasurer has advised that a short-term interest rate (STIR)future would be better.

Which of the following is true of an STIR?

Options :

A : A STIR can be tailored to the exact needs of the company.

B : A STIR is flexible and the position can be closed quickly and easily.

C : A STIR must be kept for the whole duration of the contract.

D : If interest rates have gone down the price of the future will have fallen.

Answer: B

Question 3

Which of the following statements best explains why a corporate treasury department should be established as a cost centre rather than a profit centre?

Options :

A : The Treasury Department should not be encouraged to speculate.

B : The Treasurer should not have a great deal of responsibility.

C : There is no way for the Treasury Department to generate revenue.

D : The Treasurer has the ability to manipulate the Department-s reported profit.

Answer: A

Question 4

FGT is evaluating the political risks associated with its operations around the world.

Which of the following would indicate that a particular subsidiary has a high level ofpolitical risk?

Options :

A : Forthcoming elections in the subsidiary-s host country.

B : The subsidiary-s host country requires the active participation of local partners before the subsidiary can operate.

C : Company law in the subsidiary host country is lax.

D : The subsidiary islocated a considerable distance from FGT-s home country.

E : Thesubsidiary employs a large number of nationals from the host country.

Answer: A,B,C

Question 5

B, a construction company, has a policy of carrying out a post completion audit on every construction project undertaken where the value exceeds $1 million.

What is the role of the post completion audit?

Options :

A : To reward staff and celebrate success.

B : To signify the end of the project.

C : To highlight what can be done to improve similar future projects.

D : To apportion blame for things not done well.

Answer: C

Free CIMAPRO19-P03-1-ENG Mock Exam – Practice Online Confidently

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