Online Access Free CIMAPRA19-P03-1 Practice Test

Company W produces mobile phone components and has recently tendered for a substantial contract. The results of the tendering process will not become available until three months from now. If the company is successful it will require 2,000 units of a commodity which is currently traded in an open commodity market for $740 per unit. However, there has been speculation that this commodity could increase substantially in price over the next three months and so the company is considering purchasing the commodity now and storing it for three months.
The funds to buy the commodity would be borrowed at an annual interest rate of 7% and the storage cost of the product would be $5.40 per unit per month. The storage costs would be paid at the end of the three month storage period.
Which of the following represents the gain or loss (to the nearest thousand dollars) that will accrue to Company W assuming that the price of the commodity rises to $800 in three months' time?

• A.$62,000 gain
• B.$95,000 gain
• C.$16,000 loss
• D.$88,000 gain

The Board of Directors of VCX, a state-owned electricity company, includes four executive directors the Chief Executive Officer, the Finance Director the Operation Director and the Technical Director All of the shares in the company vest in the Office of the Minister for Energy, who is entitled to appoint two non-executive directors to the Board It has been alleged that the Minister appoints political "insiders" who have no particular knowledge of. or interest in. the electricity industry There are three further non-executive directors
* L, who spent seven years as Chief Executive of VCX, but retired from that role two years ago,
* M, who spent several years on the Board of a state electricity company in a different country to VCX but who resigned from it before accepting the position with VCX: and
* N, who is a qualified and experienced professional accountant
In relation to best practice in respect of Corporate Governance, which of the following statements are valid? Select ALL that apply

• A.None of the executive directors should be allowed to sit on the Remuneration Committee
• B.M and N are both suitable appointees to the Audit Committee
• C.The Finance Director should be part of the Audit Committee because of her expertise
• D.Non-executive directors should be responsible for monitoring the performance of executive management especially with regard to company strategy and objectives
• E.L can now be considered to be an independent non-executive director
• F.M is unsuitable to be part of the Board because his previous involvement with a similar company in another country is a conflict of interest.

A US company has to pay £500,000 for a new machine.
You have the following information on currencies.
EUR 1 = £1.2300
EUR 1 = USD 1.6200
What is the cost of the machine in USD?
Give your answer to the nearest $.

A publicly funded hospital has put various features in place in an attempt to improve strategic control and create an improved control environment.
Which TWO of the following features are most likely to meet this objective?

• A.Ensuring that all medical staff are aware that their first priority should be to discharge patients as quickly as possible at all times so as to minimise wasting hospital resources.
• B.The setting up of a Risk Management Committee to examine the strategic risks applicable to the entity and to formally report on a quarterly basis.
• C.Ensuring that the Head of Internal Audit examines and authorises all expense claims by hospital staff.
• D.An Audit Committee consisting of five independent persons with expertise in finance, human resources, and medicine.
• E.A strict policy of capping the maximum salary payable to any employee at 110% of the average earned by that category of employee in the country in which the hospital is located.

GHY is a listed company. Tom is GHY's CEO and Peter is its non-executive Chair of the Board. Tom and Peter both have substantial relevant business and industrial experience and both are believed to have considerable integrity. Tom and Peter quickly developed a good working relationship after Peter's appointment. They have become close friends.
Tom briefs Peter on every aspect of the business. Tom and Peter jointly agree the agenda for every board meeting and both agree on the manner in which matters will be presented to the board.
Taking account of the principles of good corporate governance, which of the following statements is correct?

• A.Since the non-executive chair clearly has a significant role within this company there is little danger that any individual will become excessively dominant.
• B.Non-contentious board meetings show how well Tom and Peter are running the company and shows that the management is cohesive.
• C.The relationship between Peter and Tom may have a detrimental effect on company decision making as the Board is not always being informed about matters in an unbiased manner.
• D.It is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company.