P3 Leak Questions

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Question 48

Which of the following scenarios might be relevant stress tests for a potential lender to conduct? Which TWO of the following answers are correct?

Options:

The potential borrower could be involved in an accounting scandal

The potential borrower might have manipulated the figures in the loan application.

The potential borrower might lose its three main customers.

The potential borrower might seek further debt in the future.

The potential borrower might have to agree to a major wage increase for its employees.

Question 49

DRF is a manufacturing company

The internal auditor is conducting an investigation into the operation of the payroll system and has discovered a compliance error

The Head of Human Resources (HR) is required to add any new names to the payroll, using a specific computer password The Head of HR was absent for a month because of ill health During that period a senior member of the Wages Office, who is normally responsible only for organising wage payments, was issued a temporary password in order to add new names to the payroll The password was cancelled when the Head of HR returned to work

Which TWO of the following statements are correct?

Options:

The senior member of the Wages Office should be disciplined for being in breach of the rules

The senior member of the Wages Office could have committed fraud

The compliance error should be overlooked because it was as a result of staff absence

The internal auditor should ignore the error because it only lasted for one month

The payroll should be checked thoroughly to ensure that only authorised staff are present

Question 50

M plc has a $2 million loan outstanding on which the interest rate is reset every 6 months for the following 6 months and the interest is payable at the end of that 6-month period. The next 6-monthly reset period starts in 3 months and the treasurer of M plc thinks that interest rates are likely to rise between now and then.

Current 6-month rates are 7.2% and the treasurer can get a rate of 7.7% for a 6-month forward rate agreement (FRA) starting in 3 months' time. By transacting an FRA the treasurer can lock in a rate today of 7.7%.

If interest rates are 8.5% in 3 months' time, what will the net amount payable be?

Give your answer to the nearest thousand dollars.