[Mar-2023] CIMA P3 Actual Questions and Braindumps [Q27-Q46]

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[Mar-2023] CIMA P3 Actual Questions and Braindumps

Pass P3 Exam with Updated P3 Exam Dumps PDF 2023

QUESTION 27
Which risks should be given the highest priority?

Risks which have a high impact and have a low likelihood of arising.

Risks which have a low impact but which arise frequently.

Risks which have a low impact and a low likelihood of arising.

Risks which have a high impact and which may arise occasionally.

QUESTION 28
Which THREE of the following form part of the role of Internal Audit?

Working with operational management teams to help identify risks to the business.

Working with operational management teams to devise new controls to help minimise risk to the business.

Providing training to operational management on the identification of risk

Implementing internal controls which address the key business risks identified by the risk management team

Carrying out special investigations of risk.

Monitoring the effectiveness of controls implemented by operational management

QUESTION 29
H is a senior production manager for P Ltd which is about to make a strategic decision on setting up a new production line requiring $3 million of new specialist equipment.
H’s daughter is friends with and goes to school with the daughter of T, the sales manager in KK Ltd. KK Ltd is a potential supplier of the specialist equipment that P Ltd requires.
T owns a holiday home. H’s daughter regularly accompanies T’s daughter on family vacations at this holiday home, all at T’s expense.
H is the only person working for P Ltd who is qualified to select the specialist equipment. KK Ltd will definitely bid for the sale.
What should H do?

H should exclude KK Ltd from the bidding process.

H should declare an interest and withdraw from the assessment process.

H should permit KK Ltd to bid, but should insist that T should not be involved.

H should declare an interest, giving details of his daughter’s friendship with T’s daughter, but should participate fully in the assessment process.

QUESTION 30
D plc is a public relations company. Shares in D plc have recently been listed on the UK stock exchange.
D plc has an internal audit department that reports to the Chief Executive Officer (CEO). The CEO is considering outsourcing internal audit to an audit firm, which would not be the firm that conducts D plc’s external audit.
Identify THREE advantages to D plc of outsourcing internal audit in this way.

Doing so may improve independence.

Decisions relating to internal audit can be based solely on cost.

Internal audit will have a better understanding of D plc’s objectives and culture.

Specialist skills may be more readily available.

Risk of staff turnover is passed to the outsource company.

QUESTION 31
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?

$62,000 gain

$95,000 gain

$88,000 gain

$16,000 loss

QUESTION 32
UJK manufactures garden machinery. The company is dependent upon another manufacturer for the motors that power its products.
One of the factors that is being considered in a stress test requested by UJK’s Board is the possibility that the motor manufacturer increases its selling prices by 10% The motor accounts for a significant proportion of the overall manufacturing cost of UJK’s products Which of the following are correct?

The motor manufacturer should be contacted and told that a substantial increase in selling prices would have a drastic impact on UJK

The possibility of an increase in selling prices due to increased costs should be noted in the stress test report

UJK should estimate the impact on demand of increasing selling prices to pass on the increased cost of the motors.

The impact of absorbing the increased cost of motors on UJK’s profits should be calculated.

UJK should identify an alternative vendor of suitable motors as part of its stress test

QUESTION 33
HIW manufactures motorcycles and has factories in several countries HIW produces several different types of motorcycle, with different models often being tailored to suit the needs of customers in specific countries HIW has identified a positive net present value project to build a new factory in Farland, which will make motorcycles for sale in Farland and for export to neighbouring countries HIW has not previously traded in Fartand or its neighbours Farland is regarded as politically and economically unstable and its currency is highly volatile against other leading currencies HIWs Board wishes to consider the interests of different stakeholder groups who will be affected by the investment in Farland The Board recognises that there could be conflict between the goals of maximising profit and of maximising shareholder wealth Which THREE of the following statements are correct?

In order to focus on profit maximisation, the appraisal needs to consider the time value of money

The new facility will increase earning capacity but the instability may mean profits are lower than expected.

Shareholder wealth the project appraisal must consider the long term the Farland economy

In order to focus on maximising shareholder wealth the project appraisal must consider the long term impact of the project.

HIWs share price must rise when the Farland project is announced.

QUESTION 34
JC is a car manufacturing company in country C and manufactures diesel cars It is facing a number of serious risks Which TWO of the following risk factors are external?

JC’s marketing director is considering an attractive job offer from one of J’s main competitors

Country F, JC’s main market, is threatening to impose tariffs on car imports

JC is facing court action arising from injuries to customers caused by an alleged brake failure in one of its cars

Diesel cars are being criticised by experts because it is believed they cause more harmful pollution than petrol

JC’s production staff are complaining that their wages are too low compared to wages paid to other employees.

QUESTION 35
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?

The use of a two level system, a primary password plus questions correctly answered from set of queries, logged at system set up time.

The use of drop down menus, using screen coordinates rather than transmitting keystrokes over a communication link.

The logging and reporting of failed password attempts.

The password should be typed quickly.

The use of family members names, known only to the individual and not known by colleagues.

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.

QUESTION 36
R is a manufacturer of biscuits. The market for biscuits is extremely competitive with many companies competing for contracts with large supermarkets. The intensity of the competition means that prices are kept low; and the buyers can demand higher levels of quality, and greater flexibility in supply arrangements.
Which of the following represent ways that the use of an Information System could help R to win and retain supermarket contracts in such a competitive market?

It could facilitate product ordering and selection by the use of Electronic Data Interchange.

If R’s system is integrated with that of a particular supermarket, then this will make it more expensive for the supermarket to change to a different supplier.

It would mean that R’s products would be more prominently displayed on the supermarket shelves.

It could be used to facilitate more timely and accurate delivery which would minimising waste.

If R’s system is integrated to that of a particular supermarket then other supplier’s systems cannot also be integrated to that supermarket system.

QUESTION 37
You are in process of compiling a risk register for P, a company which maintains railway tracks. This helps prevent accidents and ensures the trains are not disrupted due to problems with the track.
Which of the following statements are valid?

A properly compiled risk register will identify all the risks to which P could possibly be exposed.

A risk register should profile each risk in terms of probability and consequence.

A risk register should concern itself with only the direct consequences of each risk such as injury to passengers and ignore indirect risks, such as re-routing trains due to an accident.

The risk register for P should be updated frequently: for example, every two weeks.

The risk register should specify the individual, or group of individuals, responsible for the management of each risk.

QUESTION 38
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?

$9,493

$25,606

$54,120

$115,606

QUESTION 39
B is a horticultural retailer with limited funds available to acquire new retail property.
B’s Finance Manager has analysed two potential property investments. Investing in property P shows an IRR of 21% while the IRR on property Q is 17%.
The Finance Manager has also advised that the NPV for property P is $750K, while the NPV of property Q is
$850K.
The Board needs to choose between the two properties as it has insufficient funds for both. Based purely on the Finance Manager’s analysis, which of the following is true?

Premises P is clearly better than property Q in all respects.

Premises Q is clearly better than property P in all respects.

Board members who wish to maximise return on capital employed will want property P while those who wish to maximise shareholder wealth will want property Q.

Board members who wish to maximise return on capital employed will want property Q while those who wish to maximise shareholder wealth will want property P.

QUESTION 40
A patient has been prescribed a new medicine by their physician. The medicine is accompanied by a leaflet describing potential adverse effects associated with taking it. Most of these potentially adverse effects are trivial, but the leaflet states that three patients in every 10,000 who take the medicine suffer a severe reaction requiring urgent medical attention.
Which of the following statements is true?

Statistical probabilities mean very little in themselves when dealing with decisions that could have serious consequences, such as whether to take this medicine.

The patient should ignore the risk because there is only a 0.03% risk of a severe adverse reaction.

Statistically, the medicine is safe.

The patient should not be concerned because only those few patients who are susceptible to this reaction are at risk.

QUESTION 41
CDE an online ticket sales agent, has unwittingly become an accomplice in cyber crime and is suffering attacks on its own business as a result CDE’s website was poorly designed and cyber-attackers have managed to inject the site with malware, so that it collects all of CDE’s customer log-in information and enables the cyber-attackers to retrieve it.
The cyber-attackers subsequently use this information to set up Botnet agents in the customers’ devices which are then used in a Distributed Denial of Service (DDoS) attack whenever very popular tickets are being placed on sale such as international football matches.
The cyber-attackers secure access to a single portal on the site and buy multiple tickets for subsequent sale on the black market while the DDoS causes all other portals to be overloaded preventing real fans acquiring the tickets at face value.
Which TWO of the following apply in this scenario?

CDE customers will turn to other ticket sources for their tickets

CDE is likely to face significant fines for the breach.

CDE is likely to lose the ticket franchise for international football events

CDE will need to implement a new firewall to prevent this type of attack.

CDE will remain just as profitable selling to the black market as to real fans

QUESTION 42
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.

QUESTION 43
Why is it potentially useful for an organisation to maintain a risk register?

To ensure that recognised risks are adequately managed.

To ensure that there are no undiscovered risks.

To eliminate all recognised risks.

To provide the risk manager with a role.

QUESTION 44
Which of the following statements best explains why a corporate treasury department should be established as a cost centre rather than a profit centre?

The Treasury Department should not be encouraged to speculate.

The Treasurer should not have a great deal of responsibility.

There is no way for the Treasury Department to generate revenue.

The Treasurer has the ability to manipulate the Department’s reported profit.

QUESTION 45
Identify, from the list provided, which category of business risk most accurately describes the events detailed below.

QUESTION 46
H Ltd is a company providing postal and courier services to small businesses. Customers pay a monthly or annual subscription fee to use the service, plus a very small fee for each item delivered.
A year ago, H employed a new sales team. Their remuneration is dependent on the number of new customers they sign up. Sales increased dramatically in the first six months, but now difficulties are emerging such as new customers dropping their subscription once the initial period has expired; subscriber direct debits being returned unpaid; subscribers going out of business and other similar issues.
Which of the following would be appropriate to help resolve these problems?

Alter the pricing structure in order to increase the price for sending each item but decrease the subscription element of the fee.

Ensure that a credit check is carried out before a subscriber is accepted.

Reduce the rate of commission payable to any sales person who fails to sign up at least an agreed minimum number of customers each month.

Alter the commission arrangements so that commission is payable only when the subscriber signs up for a second year.

Preparing a monthly report for sales persons detailing the performance of each new customer they have signed up over the previous year.

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