CIMA Strategic Level Case Study Exam P3 Practice Test Engine: Try These 287 Exam Questions
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The Risk Management certification exam is structured in two parts. The first part consists of multiple-choice questions that test a candidate's knowledge of risk management concepts, while the second part is a case study that assesses a candidate's ability to apply the concepts learned in real-life scenarios. P3 exam is computer-based and is available globally through authorized testing centers.
Learning Concepts of CIMA P3: Risk Management Exam
The CIMA P3 Risk Management Exam is a test that will allow you to analyze all risks involved in the company. The professionals who are responsible for this management don't only focus on financial risks, but they also pay attention to operational risk, information technology risks, and legal risks. On the exam, there are 6 questions related to this subject. There are 3 different exercises that are designed to reveal whether you have a basic or advanced knowledge of this subject. CIMA P3 Dumps will help you to take the certification exam and get your CIMA P3: Risk Management Certification.
NEW QUESTION # 107
Y plc, a pharmaceutical company, has dealt with a number of risks in the manner indicated below.
Use the TARA framework to classify each of Y plc's responses.
Answer:
Explanation:
NEW QUESTION # 108
Multinational companies have a variety of methods by which to manage currency risk.
Select ALL internal hedging methods from the following list.
- A. Pooling
- B. Invoice in home currency
- C. Forward contracts
- D. Money market hedge
- E. Leading and lagging
- F. Matching
Answer: A,B,E,F
NEW QUESTION # 109
Select the most appropriate level of responsibility for managing each of the following risks.
Answer:
Explanation:
NEW QUESTION # 110
R is a company running gas-fired power stations in Western Europe. The Risk Committee has just received a report that a power station built to the same design and specification in a developing country has recently collapsed. The causes of the collapse are unclear, but if something similiar were to happen in Europe the consequences for R could be catastrophic.
Which of the following actions being considered by the Risk Committee are ethical?
- A. Issue a press release confirming that all R's power stations are "entirely safe".
- B. Draw up contingency plans in case some of R's power stations need to be shut down.
- C.
- D. Attempt to increase the level of insurance cover against this type of eventuality.
- E. Send experts employed by R to the site of the collapse so that they can gather information first hand on what happened.
- F. Decide that the information available to date is too uncertain to take any action for now.
- G. Commission a reputable firm of structural engineers to carry out a review of all power stations owned by
Answer: B,E,G
NEW QUESTION # 111
The internal audit department should always give a report at the end of its audit. This report is intended to be useful and help the company going forward. The report should always include any recommendations for improvements. Which of the following statements are true and which are false?
Answer:
Explanation:
NEW QUESTION # 112
Y plc, a pharmaceutical company, has dealt with a number of risks in the manner indicated below.
Use the TARA framework to classify each of Y plc's responses.
Answer:
Explanation:
NEW QUESTION # 113
VBN uses a balanced scorecard to monitor the performance of its divisions.
Classify each of the following decisions taken by a division's management team as either commercially sound or dysfunctional.
Answer:
Explanation:
NEW QUESTION # 114
A has an opportunity to invest $90,000 in a project that is expected to generate annual cash inflows of $60,000 for each of the next three years. The project's beta coefficient implies a discount rate of 12% for this project, based on a risk-free rate of return of 3%.
A is prepared to forego the expected cash flows from this project in return for a guaranteed payment of
$50,000 at the end of year 1, $42,000 at the end of year 2 and $30,000 at the end of year 3.
What is the certainty equivalent value of this opportunity to A?
- A. $9,493
- B. $25,606
- C. $115,606
- D. $54,120
Answer: B
NEW QUESTION # 115
The safety guard on a piece of equipment was broken. The factory manager suspended an operator who refused to operate the equipment until it was repaired. The factory manager paid another operator a bonus for operating the damaged equipment until the safety guard could be repaired.
What does this incident say about the control environment within that factory?
- A. Management is not particularly concerned with managing risks.
- B. This factory's safety record is likely to be poor.
- C. Employees will perceive that management does not care about health and safety risks.
- D. Employees are motivated to maintain productivity.
- E. Management has a proportionate and considered attitude towards risk.
Answer: A,B,C
NEW QUESTION # 116
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?
- A. Look for a loan with a lower interest rate.
- B. Introduce credit checks for new customers.
- C. Pay suppliers' invoices quicker.
- D. Reduce the company bank loans.
Answer: B
NEW QUESTION # 117
Y Company wishes to recruit an employee who will have responsibility for the receipt and handling of cash From the point of view of the internal auditor which THREE of the following would be most likely to provide useful information about the candidate"?
- A. Confirmation that the candidate does not have a criminal record
- B. The candidate's academic qualifications.
- C. References from previous employers of the candidate.
- D. The candidate's personal referees
- E. The candidate's membership of a professional body
Answer: C,D,E
NEW QUESTION # 118
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.
Answer:
Explanation:
NEW QUESTION # 119
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?
- A. The shareholders now have more useful information.
- B. The risk report means that the shareholders know exactly how bad the risk is.
- C. The risk report says nothing useful about the risk.
- D. Now the shareholders know the directors are aware of the risk.
- E. If the risk report had not reported the risk the shareholders might not have been aware of the risk.
Answer: A,D,E
NEW QUESTION # 120
CW is a large company in the food production industry. It has grown over the years by the acquisition of several smaller rivals CW has ten branches located in its home country and has just opened a foreign branch for the first time It has recently made some changes to the structure and implementation of its control system.
Which TWO of the following changes would be most likely to improve the overall control system?
- A. Purchase invoices are now approved for payment at branches and a list of approved invoices are sent to head office for payment The invoices, supporting documentation and suppliers' statements are retained at the branches
- B. Establishing an internal audit department
- C. A policy has been initiated to complete a physical inventory of all non-current assets at least annually This is then reconciled with the non-current asset register
- D. Excess funds are now invested, by the finance director, in short-term securities The finance director initiates buy and sell transactions and she also receives and retains all correspondence relating to the investments
- E. CW has just opened a bank account in the currency in which the newly opened branch is now operating
Answer: A,B
NEW QUESTION # 121
UIO designs clothes and pays third parties to manufacture them A recent television programme showed that two of the factories used by UIO were employing illegal immigrants whose status was used by the factory's owners to force them to work for low wages and in unpleasant and dangerous conditions. These factories were located in a developed country with strong labour laws Classify each of the following statements as true or false:
Answer:
Explanation:
NEW QUESTION # 122
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.
Answer:
Explanation:
NEW QUESTION # 123
You are the Management Accountant for P, a food manufacturing company with an annual sales revenue of $5 million.
You discover that the Production Manager's records are inconsistent. Raw materials purchased do not agree to the total recorded for transfers to production plus wastage. There is an average shortfall of 2% of purchases.
You investigated and discovered that there are often mistakes made during manufacturing that results in food that is safe to eat, but cannot be sold because of visual flaws. The Production Manager is supposed to scrap all such damaged product and write all such losses off as waste, but you discovered that he has been giving the damaged food to a charity that assists homeless people. No records are made of such gifts in order to conceal the losses due to manufacturing errors.
What should you do?
- A. Instigate a review of the production process to potentially reduce the amount of wastage.
- B. Instigate a confidential, but documented, review with the Production Manager and tell him to stop.
- C. Instigate disciplinary action, this is both theft and poor management.
- D. Instigate a process whereby edible but unsellable items can be given to the charity officially.
- E. Do nothing, this is a good cause and the amount is insignificant.
Answer: A,B,D
NEW QUESTION # 124
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. 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.
- 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 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.
- D. YHU should ignore the interaction between risk factors when considering its response to the possibility of mislabelled ingredients
- E. 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
Answer: B,E
NEW QUESTION # 125
W is a construction company which undertakes large projects for governments and other clients worldwide.
Following extensive tendering processes, contracts are issued for successful tenders, and projects typically take three to five years to complete. Contracts are normally fixed-price and many have considerable penalty clauses.
Which of the following would be appropriate policies and controls for W to implement?
- A. Ensuring that the minimum legal wage is paid to all workers on the construction sites.
- B. Ensuring a consistent separation of duties between those involved in the preparation of tenders and those involved in the planning of projects.
- C. Unsuccessful tenders should be analysed to establish the cause of them failing to be awarded the work and help to avoid future failures.
- D. In order to ensure the maximum chance of winning the contract, tenders always commit W to completing the work at the lowest possible price and in the shortest possible time.
- E. Contract terms should be worded precisely so that additional work is not deemed to form part of the contract.
- F. The project steering committee and project board should receive regular project status reports.
Answer: C,E,F
NEW QUESTION # 126
JHG manufactures inexpensive cars that compete largely on price Its cars have very basic equipment and small but economical engines JHG's Board is considering launching a luxury brand of cars that will be far better equipped, more comfortable and have much better performance Which THREE of the following would be relevant factors to incorporate into the stress testing of this new strategy to create a luxury brand?
- A. The cost of designing new cars.
- B. The need for consumer research
- C. Potential changes in interest rates.
- D. Reductions m motorway speed limits
- E. Increased tax on vehicle emissions
- F. Sales of JHG's existing range of cars
Answer: A,E,F
NEW QUESTION # 127
Identify, from the list provided, which category of business risk most accurately describes the events detailed below.
Answer:
Explanation:
NEW QUESTION # 128
A project has been evaluated on the basis that it will cost $22 million and will have a net present value of $4.3 million The project has commenced and $5 million of the $22 million has been invested. A problem has been discovered that will cost an additional $4.5 million to rectify. The $4.5 million will be payable immediately.
What is the NPV of continuing with this project?
- A. -$5million
- B. $4.8million
- C. $1million
- D. -$0.2million
Answer: B
NEW QUESTION # 129
UIO designs clothes and pays third parties to manufacture them A recent television programme showed that two of the factories used by UIO were employing illegal immigrants whose status was used by the factory's owners to force them to work for low wages and in unpleasant and dangerous conditions. These factories were located in a developed country with strong labour laws Classify each of the following statements as true or false:
Answer:
Explanation:
NEW QUESTION # 130
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 # 131
Some sensitive computer systems are particularly attractive to cyber criminals. Passwords may be used as one element of restricting access to legitimate users, but the password systems should be designed with great care.
Which of the following methods would enhance a password access system?
- A. The password should be typed quickly.
- B. The use of family members names, known only to the individual and not known by colleagues.
- C. The use of a two level system, a primary password plus questions correctly answered from set of queries, logged at system set up time.
- D. The use of a sequence of passwords, using upper and lower case with numbers, easy to remember but regularly changed for example; November 11, December12, January01.
- E. The logging and reporting of failed password attempts.
- F. The use of drop down menus, using screen coordinates rather than transmitting keystrokes over a communication link.
Answer: C,E,F
NEW QUESTION # 132
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