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CIMA Updated P3 Exam Questions and Answers by eben

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CIMA P3 Exam Overview :

Exam Name: Risk Management
Exam Code: P3 Dumps
Vendor: CIMA Certification: CIMA Strategic level
Questions: 339 Q&A's Shared By: eben
Question 20

The shares of a company have a beta factor of 1.15. Therefore, which of the following must be true?

Options:

A.

The shares have more unsystematic risk than the stock market average.

B.

The shares have more systematic risk than the stock market average.

C.

The shares have more total risk than the stock market average.

D.

The shares have less unsystematic risk than the stock market average.

Discussion
Question 21

C Ltd is a private, family-owned company which is hoping to become listed on a recognised Stock Exchange within the next two years. At the moment, the Board of Directors comprises five directors; four of whom are from the founding family and all of whom are involved in the day-to-day running of the business. The remaining director obtained a seat on the Board three years ago as a condition of an investment by a venture capital fund.

The Board meets in half-day sessions once a fortnight and the Board meetings are reasonably well run. All decisions are taken by the Board as a whole. There are no sub-committees.

Which of the following steps would it be appropriate for C Ltd to take in the light of the proposed listing?

Options:

A.

Appoint enough independent non-executive directors (NEDs) that they make up at least 50% of the Board.

B.

Appoint one of the NEDs as Chair of the Board.

C.

Insist that the venture capital company director be removed as he is not necessarily motivated to act in the best interests of C Ltd.

D.

Set up at least three sub-committees namely remuneration, nomination, and audit committees.

E.

Ensure that the current executive directors are given 10 year contracts starting on the day the company is floated, to ensure consistency and continuity in the management of the company.

F.

Set up an "agenda setting" sub-committee consisting of the current executive directors to decide the agenda for each Board meeting.

Discussion
Question 22

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?

Options:

A.

QAW's Director of Legal Affairs should investigate the matter and. if necessary, develop suitable standard contracts for QAW Land Reclamation.

B.

The Audit Committee should treat this as an internal matter that should be dealt with by the management team of QAW's Land Reclamation.

C.

The Audit Committee should disregard the point because an explanation has been offered by the manager in charge of QAW Land Reclamation.

D.

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.

Discussion
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Question 23

DFG is the largest bridge-building company in its home country, H. DFG works exclusively for the government of country H and the government awards DFG 80% of the contracts to build new bridges.

DFG's directors are considering using the big data approach to identify opportunities to increase sales revenues and profit.

Which of the following statements are true?

Options:

A.

Big data has the potential to identify ways in which DFG can reduce construction costs.

B.

DFG should supplement its existing databases in order to enhance the benefit from big data.

C.

The big data approach may help DFG to price contract bids more accurately.

D.

Big data has the potential to identify ways in which DFG can increase sales.

E.

It would be unethical for DFG to use big data in order to compete even more effectively with its rivals.

Discussion
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