P3 CIMA Risk Management exact Exam Questions

Risk Management

Last Update 8 hours ago Total Questions : 339

The Risk Management content is now fully updated, with all current exam questions added 8 hours ago. Deciding to include P3 practice exam questions in your study plan goes far beyond basic test preparation.

You'll find that our P3 exam questions frequently feature detailed scenarios and practical problem-solving exercises that directly mirror industry challenges. Engaging with these P3 sample sets allows you to effectively manage your time and pace yourself, giving you the ability to finish any Risk Management practice test comfortably within the allotted time.

Question # 41

The list below has duties performed by risk managers and internal auditors. Show who would carry out the duties assuming the company has both risk managers and internal auditors.

Question # 42

FBK produces motorbikes for the high end sports market. The company has recently developed a bike that uses a powerful electric motor instead of a petrol engine.

Which of the following are product risks?

Select ALL that apply.

The risk that the silent running of the bike will create a hazard to pedestrians.

The risk that a bike powered by a quiet electric motor will not create the thrilling engine noise that is prized by traditional riders.

The risk that demand for the bike will exceed production capacity

The risk that the different characteristics of an electric engine will make the bike difficult to control

The risk that FBK cannot afford to finance the working capital associated with the launch

Question # 43

DFG ' s home currency is the D$.

DFG is heavily exposed to the exchange rate between the D$ and the L$, country L ' s currency. DFG ' s treasurer has noted the following:

• Inflation has been running at 5% in DFG ' s home country and 8% in country L

• Interest rates are 7% in DFG ' s home country and 11% in country L

• The spot rate is D$1.0000 = L$2.1000 and the three month forward rate is D$1.0 = L$2.1196

Which of the following statements is consistent with these figures?

Interest rates are expected to continue unchanged, but country L ' s inflation rate will increase in proportion to the inflation rate in DFG ' s home country.

Interest rates are expected to continue unchanged, but country L ' s inflation rate will decrease in proportion to the inflation rate in DFG ' s home country.

Country L ' s interest rate is expected to decline relative to that of DFG ' s home country and inflation rates are expected to continue unchanged.

Country L ' s interest rate is expected to increase relative to that of DFG ' s home country and inflation rates are expected to continue unchanged.

Question # 44

An oil company has entered into a joint venture with a competing oil company to develop a new oil field. The joint venture arrangement is intended to mitigate the risks associated with developing the oil field.

The following disclosure appears in the oil company ' s risk report:

" Many of our large projects and operations are conducted through joint ventures. These arrangements involve complex risk allocation and indemnification arrangements and we have less control over these activities than we would have if we had full ownership and control. Our partners may have economic or business interests that are opposed to ours, and may exercise the right to block key decisions or actions. We believe the joint arrangement is in our best interest. "

Which of the following statements are correct?

The risk report means that the shareholders know exactly how bad the risk is.

The risk report says nothing useful about the risk.

Now the shareholders know the directors are aware of the risk.

If the risk report had not reported the risk the shareholders might not have been aware of the risk.

The shareholders now have more useful information.

Question # 45

Which of the following is an ethical dilemma?

A company is considering giving poorly-paid staff a generous pay rise.

A company is deciding whether to issue debt or equity.

A company is deciding whether to make a substantial bonus payment to its directors by means of cash or shares.

A company must decide whether to settle a claim from an employee who appears to have fabricated a workplace injury. The company want to avoid the cost of defending the claim.

Question # 46

Kate is a management accountant. Her immediate superior plans to apply for a promotion and his strongest competitor is the sales manager. Kate ' s superior has ordered her to set unattainable sales targets in a sales budget in order to reduce the sales manager ' s promotion prospects. He told her not to tell anybody.

Kate asked the finance director for advice. He told her that he wanted her immediate superior to get the promotion and so she should set the unattainable budget as instructed.

Kate set the budget as instructed.

Which THREE fundamental ethical principles has Kate breached?

Integrity

Objectivity

Professional competence and due care

Confidentiality

Professional behaviour

Question # 47

Which of the following best describes the conflict between maximising profit and maximising shareholder wealth?

Managers are generally more interested in maximising shareholder wealth than in maximising profits or sales.

Profit and shareholder wealth are unrelated.

Tax is paid on profit, but not on shareholder wealth.

Profits can be increased from one year to the next without increasing shareholder wealth.

Question # 48

S, a qualified and experienced professional accountant, has been appointed as a non-executive member of the Audit Committee of X X has recently obtained a listing on the second tier of a reputable Stock Exchange

B, the Finance Director, is only worried about the maintenance of proper financial controls and is less concerned with operational controls

S has asked A. the Production Director, to produce regular reports for the Audit Committee on production specification compliance and related issues A is concerned that this means S does not think he is doing his job properly and doubts his integrity

In relation to this scenario, which of the following statements are valid?

Select ALL that apply.

The appointment of an independent professionally qualified and experienced accountant will help strengthen the Audit Committee.

A is correct in believing that being asked to report to the Audit Committee in the manner described above suggests a lack of trust in his ability or integrity

The Audit Committee should plan for the receipt of regular reports on production specification compliance and related issues

B is correct to be more concerned about the maintenance of financial controls because they are inevitably more important than operational controls.

If X is not seen to have an effective Audit Committee it will be exposed to increased market risk

There is no benefit for X of A producing reports for the Audit Committee unless there are some members on the Audit Committee who have expertise in the production area

Question # 49

VBN ' s home currency is the V$. On 1 January, VBN must make a payment of C$2 million on 31 March of that same year.

On 1 January the spot exchange rate was V$1 = C$0.4.

On 1 January VBN paid $180,000 for a call option to buy C$2 million for V$5.5 million on 31 March. VBN ' s cost of borrowing was 8% per year.

On 31 March the spot rate was V$1 = C$0.45.

What was the total cost, including the cost of the option, of settling the payable?

V$4.628 million

V$5.684 million

V$4.444 million

V$5.5 million

Question # 50

DFR is an online retailer that sells picture frames The software running on DFR ' s website enables customers to log in and make purchases by inputting an email address as a user name and a password that must contain at least eight characters, including upper and lower case letters, numbers and punctuation marks (e.g. £, $ or!) Once logged in, customers can check previous orders that they have placed.

Customers can also use DFR ' s website to change personal details, including credit card numbers and delivery addresses Whenever they wish to use those facilities, the software sends a text message containing a six-digit number to their mobile phones They must input that number before the system will accept changes to their personal details

Which TWO of the following statements are correct?

It is illogical to have different security measures in place for orders and for access to personal details.

The software treats customers ' personal details as being more sensitive than their ordering histories

The arrangement with the text message will have no effect on the security associated with changing personal details

Customers should be able to update the mobile phone numbers in their DFR accounts using only their email addresses and passwords for access

The software should never show the whole of a customer ' s credit card number on screen, even if the customer has logged in and input the six-digit number.

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