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CIMA Advanced Management Accounting P2 Question # 5 Topic 1 Discussion

CIMA Advanced Management Accounting P2 Question # 5 Topic 1 Discussion

P2 Exam Topic 1 Question 5 Discussion:
Question #: 5
Topic #: 1

SkillWeave Industries are focused on managing the risk of selling their cars to the region due to economic turmoil, and have now begun using funds from sales in the region to fund supplier purchases from that region to

reduce the risk from the volatile currency. However, SkillWeave want to go a step further and make the risk even less sizeable.

Which of the following is a method by which SkillWeave can operate in the market and transfer the risk of exchange rate exposure to another party?


A.

Invoice international sales in domestic currency


B.

Temporarily stop operating in that target market


C.

Arrange a forward foreign exchange rate contract agreeing to buy a given amount of the foreign currency in 3 months time for a fixed exchange rate based on current rates


D.

Put a sale on all vehicles stationed in the region to clear stock quickly


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