P3 Exam Dumps : Risk Management

There are no forward contracts available for the purchase of the payable currency using IOK's home currency.

The timing of the payable does not permit the use of a forward contract.

The relevant currency markets are very thinly traded and the treasurer believes that forward contracts are mispriced.

A money market hedge is easier and less expensive to organise than a future or forward contract.

Money market hedges can be unwound whereas positions in derivatives cannot.

Value at risk analysis, which has become available through increased computing power, is now easier to implement and can cater for extreme market conditions.

Monte Carlo analysis is a modelling technique which can be applied to financial analysis, allowing thousands of variables to be integrated together to show standard behaviours and outlier abnormalities requiring detailed understanding in a 'what if?' environment.

Sensitivity analysis involves checking the performance of a financial risk model against the various interrelationships between the different input variables in the model.

Simulation, which is becoming available through standard computing packages, is complex to implement but dynamic and adaptable to cater for different assumptions.

Regression analysis is easy to understand and implement, and based on future expectations.