Free CIMA CIMAPRA19-P03-1-ENG Exam Questions

Question 1

GHY is a listed company. Tom isGHY'sCEO and Peter isitsnon-executive Chair of the Board. Tom and Peterbothhave substantial relevant business and industrial experience andboth 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 jointlyagreethe agenda foreveryboard meetingandboth agree on the manner in which matterswill be presented to theboard.
Taking account of the principles of goodcorporategovernance, which of the following statements is correct?

A : is entirely appropriate that Tom and Peter have this kind of relationship and both are acting in the best interests of the company

B : n-contentious board meetings show how well Tom and Peter are running the company and shows that the management is cohesive.

C : relationship between Peter and Tom may have a detrimental effect on company decision making as the Boardis not always being informed about matters in an unbiased manner.

D : nce the non-executive chair clearly has a significant role within this company there is little danger that any individual will become excessively dominant.

Answer: C

Question 2

An electricity company owns and operates a nuclear power station located ten miles from a large city. A recent and very extensive engineering examination of the power station concludes with the estimate that the probability of a major nuclear disaster within the next 20 years is 0.2%.
Which of the following best explains the relevance of quantifying the risk in that way?

A : ere is no acceptable level of risk for a major nuclear accident and so the probability has little information value in itself.

B : probability is so low as to be ignored.

C : directors will be able to argue that they were not negligent in the event of a major disaster within the 20 year period.

D : The calculation of a precise probability demonstrates that the engineers who conducted the inspection are experts in their field.

Answer: A

Question 3

M plc is an IT company thatbids for large contracts to sell computer systems and also to serviceexisting systems. M plc's senior management hasalwayssetbudgets which are hard to achieve andhavemade no allowances for the recession.
The economy has improved andM plc's senior managershave made the budget even more optimistic. The budgetedsalestargethas been increased by 40%.
In the past,sales staffhave not tried to achievethe budgetsales because itwas generallybelieved that the targets wereimpossible to reach.
M plc has recently appointed a new Sales Directorwhohas decided that sales staff will bedismissedif they fail to meet sales targets for three successive months. He is also looking forhighersalesmargins than wereachievedbefore.
What are the likely consequences ofthe new Sales Director'spolicy?

A : les staff will be happier in their jobs.

B : les staff will tender for riskier contracts.

C : les staff will encroach on other sales staff territories to get more work.

D : les staff will look for new jobs.

E : les staff will feel more settled and secure in their jobs.

Answer: B,C,D

Question 4

Which method of quantifying risk exposure can be used to calculate the maximum loss on a portfolio occurring within a period of time with a given probability?

A : lue at Risk

B : gression analysis

C : mulation

D : pected value

Answer: D

Question 5

C is a large international supermarket chain. It has many thousands of suppliers and many thousands of potential suppliers competing for shelf space m its supermarkets.
Which of the following provisions would be appropriate for C to include m its ethical code in relation to its suppliers?
Select ALL that apply

A : hall insist on an exclusivity agreement with each supplier so that identical products are not available from other outlets

B : hall endeavour to adhere to the terms of its contracts with its suppliers at all times

C : hall continuously remind suppliers that it always has several alternative suppliers to choose from.

D : hall not use its buying power unscrupulously.

E : hall keep confidential all information received from suppliers and potential suppliers

F : hall endeavour to take as high a percentage of each supplier's output as possible

Answer: A,B,D