CIMA P3 Dumps - Risk Management PDF Sample Questions

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Exam Code:
P3
Exam Name:
Risk Management
339 Questions
Last Update Date : 24 February, 2024
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Realexamdumps Providing most updated CIMA Strategic Level Case Study Exam Question Answers. Here are a few exams:


Sample Questions

Realexamdumps Providing most updated CIMA Strategic Level Case Study Exam Question Answers. Here are a few sample questions:

CIMA P3 Sample Question 1

The Head of IT Security has been asked to conduct a detailed forensic analysis of a suspected data breach that ted to customer credit card details being intercepted.

Which TWO of the following would be suitable objectives for such a forensic analysis?


Options:

A. Recovering the stolen credit card details before they can be abused by criminals
B. Developing an understanding of the vulnerabilities that led to the breach
C. Identifying customers whose details have been stolen
D. The collection of evidence that can be used to convict the perpetrators of the breach.
E. Preventing the credit card companies from blaming the entity for fraudulent charges

Answer: B, D

CIMA P3 Sample Question 2

Under the COSO Enterprise Risk Management Framework, who is responsible for risk management?


Options:

A. Every member of the entity.
B. The board of directors only.
C. Managers and directors only.
D. The shareholders.

Answer: B

CIMA P3 Sample Question 3

You have just been employed as a management accountant in a small business with an annual turnover of $0.5 million.

You have a wide range of duties because the business is small.

Which of the following is an ethical risk?


Options:

A. Being asked to buy very small gifts for key clients.
B. Being asked to work weekends, playing golf with clients.
C. Being asked to work weekends, taking clients to night clubs making sure they have as much alcoholic drink as they want so that they will sign contracts.
D. Being asked to work weekends working out tenders for new contracts.

Answer: D

CIMA P3 Sample Question 4

B, a construction company, has a policy of carrying out a post completion audit on every construction project undertaken where the value exceeds $1 million.

What is the role of the post completion audit?


Options:

A. To reward staff and celebrate success.
B. To signify the end of the project.
C. To highlight what can be done to improve similar future projects.
D. To apportion blame for things not done well.

Answer: D

CIMA P3 Sample Question 5

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?


Options:

A. Unsuccessful tenders should be analysed to establish the cause of them failing to be awarded the work and help to avoid future failures.
B. Ensuring a consistent separation of duties between those involved in the preparation of tenders and those involved in the planning of projects.
C. Ensuring that the minimum legal wage is paid to all workers on the construction sites.
D. 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.
E. Contract terms should be worded precisely so that additional work is not deemed to form part of the contract.
F. The project steering committee and project board should receive regular project status reports.

Answer: A, E, G

CIMA P3 Sample Question 6

Which of the following best describes the conflict between maximising profit and maximising shareholder wealth?


Options:

A. Managers are generally more interested in maximising shareholder wealth than in maximising profits or sales.
B. Profit and shareholder wealth are unrelated.
C. Tax is paid on profit, but not on shareholder wealth.
D. Profits can be increased from one year to the next without increasing shareholder wealth.

Answer: E

CIMA P3 Sample Question 7

A capital investment project shows a NPV of £3,450 at a discounted rate of 8% and an NPV of £1,210 at a discounted rate of 9%.

What is the internal rate of return?


Options:

A. 11.85%
B. 10.85%
C. 10.54%
D. 9.54%

Answer: E

CIMA P3 Sample Question 8

The shares of a company have a beta factor of 1.15. Therefore, which of the following must be true?


Options:

A. The shares have more unsystematic risk than the stock market average.
B. The shares have more systematic risk than the stock market average.
C. The shares have more total risk than the stock market average.
D. The shares have less unsystematic risk than the stock market average.

Answer: C

CIMA P3 Sample Question 9

Which of the following is an ethical dilemma?


Options:

A. A company is considering giving poorly-paid staff a generous pay rise.
B. A company is deciding whether to issue debt or equity.
C. A company is deciding whether to make a substantial bonus payment to its directors by means of cash or shares.
D. A company must decide whether to settle a claim from an employee who appears to have fabricated a workplace injury. The company want to avoid the cost of defending the claim.

Answer: B

CIMA P3 Sample Question 10

A project has been evaluated on the basis that it will cost $22 million and will have a net present value of $4.3 million The project has commenced and $5 million of the $22 million has been invested. A problem has been discovered that will cost an additional $4.5 million to rectify. The $4.5 million will be payable immediately. What is the NPV of continuing with this project?


Options:

A. -$5million
B. -$0.2million
C. $1million
D. $4.8million

Answer: E

CIMA P3 Sample Question 11

M built a large factory last year and it has just been completed. The initial outflows on this project have a present value of $400 million and the entire project has a net present value of $30 million.

The initial phase of the project caused problems and there was an overspend of $35 million as there was unstable soil. The foundations had to be underpinned with large steel bars to ensure the building would be safe. There was no other suitable site for the project.

The construction could not be abandoned as the site would have had very little commercial value.

The Internal Audit department has been asked to carry out a post completion audit. What issues should it concentrate on?


Options:

A. The audit should consider the initial survey report when the land was purchased to see if the survey mentioned the unstable soil.
B. The audit should look at documentation to ensure proper procedures were followed at all stages of the project.
C. The audit should consider what lessons could be learned for future projects.
D. The audit should find out who was to blame for the project being over budget.
E. The audit should consider whether it should have built the factory without underpinning and sold it on quickly.

Answer: A, B, D

CIMA P3 Sample Question 12

ABC is a large supermarket chain which also has online shopping and home deliveries It has a 24/7 service which runs on a central server allowing all customers to enter new orders at any time This is a business critical service which, if not available, may lead to customers turning to alternative supermarket chains offering similar services, resulting in immediate turnover loss and possible long term customer loss.

ABC is contemplating the implementation of a hot standby facility, not only to cover for emergency disaster recovery, but also to allow for business continuity, allowing necessary maintenance and updates without service interruption.

Which of the following cybersecurity objectives is ABC concerned about in this scenario?


Options:

A. Integrity of data
B. Integrity of processing
C. Availability
D. Confidentiality

Answer: D

CIMA P3 Sample Question 13

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


Options:

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

Answer: A, D, G

CIMA P3 Sample Question 14

Physical access controls can greatly enhance the security of company assets.

Select THREE methods by which physical access security can be significantly enhanced.


Options:

A. Use of CCTV cameras monitoring all access points, with security guards monitoring images and a secured system making a recording.
B. Use of one way mirrors, so people can be observed undetected.
C. Use of USB sticks and removable media should be prohibited.
D. Use of access control pads with numerical keys on every door, which is otherwise locked.
E. Personal individual ID card access, logging individual person movement through every door, which is otherwise locked.
F. Visitors to be logged in by security staff and to be accompanied by a member of staff at all times until they leave.

Answer: A, E, G

CIMA P3 Sample Question 15

M, a manufacturing company, has had some problems with defects in one of the main products it produces. This product has been made by the company for many years and is very profitable. Last month it had over 300 defects reported by customers which is more than 15% of products sold. This is a reputation risk for M and is also affecting profitability.

Which of the following controls could M introduce to reduce defects and also increase profitability?


Options:

A. M could increase the number of quality control staff.
B. M could introduce a procedure where quality control staff sign a form at the end of each day to say they have examined 1 in 10 products for defects and they are satisfied with the quality.
C. The production director could examine one in every 10 products and sign a form to say they are satisfactory.
D. M could service machinery at least once a month as recommended by the machinery supplier.
E. M could check all employees qualifications to ensure they are qualified for their jobs.

Answer: B, D, F

CIMA P3 Sample Question 16

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?


Options:

A. An Audit Committee consisting of five independent persons with expertise in finance, human resources, and medicine.
B. 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.
C. 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.
D. 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.
E. Ensuring that the Head of Internal Audit examines and authorises all expense claims by hospital staff.

Answer: A, D

CIMA P3 Sample Question 17

P has decided to invest in a new warehouse at a cost of $2,000,000. The discount rate of the project is 18% and the present value of the tax shield is £26,000.

What is the minimum acceptable Internal Rate of Return of the project?


Options:

A. 18%
B. 17.77%
C. 18.23%
D. 16.50%

Answer: C

CIMA P3 Sample Question 18

Which of the following is an ethical dilemma?


Options:

A. A company is considering giving poorly-paid staff a generous pay rise.
B. A company is deciding whether to issue debt or equity.
C. A company is deciding whether to make a substantial bonus payment to its directors by means of cash or shares.
D. A company must decide whether to settle a claim from an employee who appears to have fabricated a workplace injury. The company want to avoid the cost of defending the claim.

Answer: B

CIMA P3 Sample Question 19

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?


Options:

A. There is no acceptable level of risk for a major nuclear accident and so the probability has little information value in itself.
B. The probability is so low as to be ignored.
C. The 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: B

CIMA P3 Sample Question 20

Which of the following are true of interest rate swaps?


Options:

A. Risk of default is high from the floating interest rate payer if interest rates rise.
B. An interest rate swap is an external hedging technique.
C. When interest rates are falling, the risk of default by the fixed interest rate payer is low.
D. Some companies use interest rate swaps to deliberately increase their risks because they believe that they are better at predicting future interest rates than the market.
E. An interest rate swap is an internal hedging technique.

Answer: A, B, E

CIMA P3 Sample Question 21

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?


Options:

A. There is no acceptable level of risk for a major nuclear accident and so the probability has little information value in itself.
B. The probability is so low as to be ignored.
C. The 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: B


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