[2022] Use Valid P3 Exam - Actual Exam Question & Answer
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NEW QUESTION 84
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.
- A. H would pay 6%
- B. H would pay 6.2%
- C. H would pay 6.4%
- D. H would pay Libor + 1%
Answer: B
NEW QUESTION 85
Which of the following statements are correct?
- A. It is always possible to remove all risks when undertaking large projects.
- B. If a project has high risks it should always be accepted as the rewards will always be high.
- C. Risk can always be transferred to someone else.
- D. If a project has low risks it will usually have relatively low returns.
- E. Risk should be carefully considered when evaluating possible future projects.
Answer: D,E
NEW QUESTION 86
Having carried out a full capital appraisal for a construction project, H Company has approved the project with initial outflows of $6,000,000 and a net present value of $1,200,000.
The implementation phase has been commenced with 25% of the costs already committed. However when the ground was opened, an underground waterway was revealed which will need to be diverted if the project is to proceed. Work to carry out this diversion has been estimated at $1,300,000.
Which of the following factors will define whether the project should go ahead or not?
- A. The project now has a negative NPV.
- B. There will be abandonment costs to restore the site.
- C. Abandoning the project will have an adverse effect on shareholder confidence.
- D. The project actually has a higher NPV than before.
- E. There may be other unexpected costs to be met if the project continues.
Answer: B,D
NEW QUESTION 87
THG is a quoted company that manufactures expensive clothes that are sold to upmarket department stores THG's Board has commissioned a stress test to identify the impact of strategic risks The consultant who is conducting the test is currently investigating the impact that a 1 % increase in interest rates would have on THG.
Which TWO of the following are valid reasons for including an increase in interest rates in the stress test?
- A. THG is highly geared.
- B. Many of the retailers who resell THG's clothes are highly geared
- C. Interest rates affect consumers' disposable income
- D. Stress testing was first developed for bank supervision.
- E. THG might change its prices if interest rates rise
Answer: A,C
NEW QUESTION 88
V buys vegetables and fruit from three farms located in a different part of V's country and sells them to large supermarket chains.
A recent newspaper magazine had an article on these farms showing that the farms employ illegal immigrants whose status was used by the factory's owners to force them to work for low wages and in unpleasant conditions. They are forced to live in small overcrowded caravans with no running water. They are also given meals which are cold and poor quality. These farms are located in a developed country with strong labour laws.
Classify each of the following statements as true or false.
Answer:
Explanation:
NEW QUESTION 89
A government department is conducting a value for money audit on a school.
The school's pupils sit leaving exams. Classify each of the audit tests as either economy and efficiency or effectiveness.
Answer:
Explanation:
NEW QUESTION 90
AZX sells electrical components.
AZX's annual turnover is S24 million. Half of all sales are on 30 days' (1 month) credit
5% of credit sales have to be written off as unrecovered debt
25% of such write off is subsequently recovered through debt collection and legal action.
What is the expected loss each year due to credit risk?
- A. $600,000
- B. $900,000
- C. S450,000
- D. 51,200,000
Answer: C
NEW QUESTION 91
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 92
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 a consistent separation of duties between those involved in the preparation of tenders and those involved in the planning of projects.
- B. Ensuring that the minimum legal wage is paid to all workers on the construction sites.
- 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. The project steering committee and project board should receive regular project status reports.
- E. Contract terms should be worded precisely so that additional work is not deemed to form part of the contract.
- F. 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.
Answer: C,D,E
NEW QUESTION 93
Systems Development Lifecycle (SDLC) is used to manage risk within the development of new computer systems.
Which THREE of the following are appropriate controls to manage risk within the SDLC Process?
- A. When doing the analysis for the new system particular care should be taken over the data specification, transformation and manipulation, ensuring that expected outputs are defined and that such output meets the needs and expectations of the business users.
- B. When the implementation of the new system is taking place, parallel running must be undertaken to ensure the output for the new system exactly matches that from the old system.
- C. When developing the new system, the developers must follow defined programming standards and carry out component test to specified test harness outputs.
- D. When planning the new system, a clear business case must be approved specifying functionality, data transformation, expected costs and benefits.
- E. When designing the new system, controls must be put in place to ensure that all the functionalities of the old system are replicated.
- F. The Post Completion Review should take place immediately after the implementation while all the facts are still fresh in everyone's minds.
Answer: A,C,D
NEW QUESTION 94
Assuming a company has both internal auditors and risk managers, indicate which of these would perform the duties listed below:
Answer:
Explanation:
NEW QUESTION 95
A UK based company is considering an investment of GB£1,000,000 in a project in the USA. It is anticipated that the following cash flows will arise from this project.
The cash flows will be either US$400,000 with a probability of 40% or US$700,000 with a probability of 60% for each of the next three years; remitted to the UK at the end of each year.
Currently GB£1.00 is worth US$1.30.
The expected inflation rates in the two countries over the next four years are 2% in the UK and 4% in the US.
Applying the Purchasing Power Parity Theory, which of the following represents the expected net present value of the project in GP£ (to the nearest whole pound)?
- A. GB£(111,973)
- B. GB£287,639
- C. GB£554,047
- D. GB£391,640
Answer: B
NEW QUESTION 96
Select the correct ethical principle that corresponds to each ethical dilemma described.
Answer:
Explanation:
NEW QUESTION 97
The Dean of Information Technology at Capital City University wishes to develop a degree in 'ethical hacking" Students will graduate from this course with the skills needed to develop malware, so that they have the ability to reverse engineer malicious software The Dean believes that there will be strong demand for such graduates from employers in IT security and related fields.
Which TWO of the following statements are correct?
- A. The University should conduct detailed background checks on applicants before they are admitted to this degree
- B. The course should teach students to reverse engineer malware without enabling them to write malware
- C. The University should not be equipping its students with skills that could be abused for the purposes of committing crime or causing harm
- D. The academic staff teaching on this degree may struggle to keep up to date with the latest developments in malware
- E. Potential employers would be suspicious of job applicants whose choice of degree indicates an interest in malware
Answer: A,B
NEW QUESTION 98
The senior manager in the accounts department is going on annual leave for three weeks and Jo, a supervisor is being put in charge of the department for that time.
Which TWO of the following statements are correct?
- A. Jo should not have all of the same authority as the senior manager
- B. Authorisation of exceptional overtime due to the year end which takes place while the senior manager is on leave should be postponed until the senior manager returns
- C. Authorisation of expenses should wait until the senior manager returns.
- D. Job interviews for an office junior should be cancelled until the senior manager returns.
- E. The annual staff appraisals should be postponed until the senior manager returns
Answer: B,E
NEW QUESTION 99
Will owns $400,000 of shares in Company X.
Company X has a daily volatility of 1% of its share price.
Calculate the 28 day value at risk that shows the most Will can expect to lose during a 28 day period.
(Will wishes to be 90% certain that the actual loss in any month will be less than your predicted figure).
Give your answer to the nearest $000.
Answer:
Explanation:
$27
NEW QUESTION 100
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 101
The senior manager in the accounts department is going on annual leave for three weeks and Jo, a supervisor is being put in charge of the department for that time Which TWO of the following statements are correct?
- A. Jo should not have all of the same authority as the senior manager
- B. Authorisation of exceptional overtime due to the year end which takes place while the senior manager is on leave should be postponed until the senior manager returns
- C. Authorisation of expenses should wait until the senior manager returns.
- D. Job interviews for an office junior should be cancelled until the senior manager returns.
- E. The annual staff appraisals should be postponed until the senior manager returns
Answer: B,E
NEW QUESTION 102
XYZ is unhappy with the way it decides on the likelihood and impact of risks when it completes the TARA matrix XYZ has decided to try other ways to get more consensus over the evaluation of risks as high, medium and low impact and likelihood Which of the following methods is likely to be most successful?
- A. Sending questionaires to all employees
- B. Using the Delphi method
- C. Searching online to see how the risks are evaluated in other companies
- D. Allowing the risk manager to decide.
Answer: B
NEW QUESTION 103
T is an accountant who has been accused of professional incompetence T agreed to advise a client on currency management and the client lost a great deal of money when a large foreign currency trade receivable declined in value without having been hedged.
Which of the following factors strengthens the case that T has been incompetent?
Select ALL that apply
- A. T had been too busy to stay up to date with continuing professional development requirements
- B. Since the loss the client's chief executive has spoken to her business contacts m the industry and all had hedged against a decline in this currency
- C. T had offered the client two alternatives showing the costs and benefits of hedging the position, but did not strongly recommend either alternative
- D. T had never offered advice on foreign currency management before
- E. T had studied all relevant economic forecasts and had concluded that it would be too expensive to hedge this receivable
Answer: A,B,D
NEW QUESTION 104
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. $88,000 gain
- B. $16,000 loss
- C. $62,000 gain
- D. $95,000 gain
Answer: C
NEW QUESTION 105
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