Question 31
Z is a multinational pharmaceuticals company with operations across Europe, America and Asia.
It is currently investigating the possibility of setting up a chemical and specialist production facility in South America. This would be a multi $billion investment. What steps should Z take to manage the following risks in this long term venture.
It is currently investigating the possibility of setting up a chemical and specialist production facility in South America. This would be a multi $billion investment. What steps should Z take to manage the following risks in this long term venture.
Question 32
You are the management accountant for YY a food manufacturing company with an annual sales revenue of
$6 million
You discover that the production manager's records are inconsistent Raw materials purchased do not agree with the total recorded for transfers to production plus wastage There is an average shortfall of 2% of purchases You have investigated and discovered that there are often errors made during manufacturing that results in food that is safe to eat but. because of visual flaws, cannot be sold The production manager is supposed to scrap all such damaged products and write all such losses off as waste You have discovered however 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 Which of the following actions should you take? Select ALL that apply
$6 million
You discover that the production manager's records are inconsistent Raw materials purchased do not agree with the total recorded for transfers to production plus wastage There is an average shortfall of 2% of purchases You have investigated and discovered that there are often errors made during manufacturing that results in food that is safe to eat but. because of visual flaws, cannot be sold The production manager is supposed to scrap all such damaged products and write all such losses off as waste You have discovered however 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 Which of the following actions should you take? Select ALL that apply
Question 33
Match the descriptions shown in the boxes below with the method of quantifying risk exposure it best describes.
Question 34
H has a floating rate loan that it wishes to replace with a fixed rate. The cost of the existing loan is LIBOR +
4%. H would have to pay a fixed rate of 8% on a fixed rate loan. H's bank has found a potential counterparty for a swap arrangement.
The counterparty wishes to raise a variable rate loan. It would pay LIBOR + 1% on a variable rate loan and
9% on a fixed rate.
The bank will require 10% of the savings from the swap and H and the counterparty will share the remaining saving equally.
Calculate H's effective rate of interest from this swap arrangement.
4%. H would have to pay a fixed rate of 8% on a fixed rate loan. H's bank has found a potential counterparty for a swap arrangement.
The counterparty wishes to raise a variable rate loan. It would pay LIBOR + 1% on a variable rate loan and
9% on a fixed rate.
The bank will require 10% of the savings from the swap and H and the counterparty will share the remaining saving equally.
Calculate H's effective rate of interest from this swap arrangement.
Question 35
H sells machinery and also associated services, such as advice and repairs. H's industry is going through considerable transformation.
Classify each of the examples of information available to H's management as strategic, operational or of having little value.
Classify each of the examples of information available to H's management as strategic, operational or of having little value.
