In the last edition of Velocity, we invited you to put your questions directly to our exam experts.
We put a selection of your questions to these experts (who are lead markers, technical assessors, experienced markers, or actual examiners):
Stuck on P3
Question
I have sat P3 three times and it is the only paper I am not through yet. My performance seems to get worse with every sitting.
1) How relevant is the CIMA study text for the paper?
2) Is the examiner interested in application of theory, or a common sense answer relevant to the scenario?
3) Would it be best to read the questions first and the case study later, or vice versa?
Answer
Reading the financial press to improve your general business and accounting knowledge is the key to passing P3. Many of the questions are based on real life issues which have been widely reported.
It is very important to demonstrate your knowledge of theory, and then apply it to the given scenario. Some common sense will no doubt help, but the application of theory counts in the end.
I would have a look at the questions, and then read the scenario carefully.
An answer plan is also very useful. It helps you to note down relevant points and then put them into some kind of order. It also helps to give your answer a logical structure and plan your time.
See our exam tips article for more on examiners' comments on exams, and common reasons for failing.
Computation queries
Question
I was wondering which computation questions could be tested on P3? I know interest rate swaps is one area. Which other areas could I expect in this exam?
Answer
You will find all the past exam papers for P3 in study resources.
You will see that there is at least one numerical question in each sitting, as follows:
Pilot paper: Q1 use of ratios, Q3 calculation of transaction risk
May 2005: Q5 currency hedging
November 2005: Q4 decisions on fixed or floating rates and interest rate swap
May 2006: Q2 calculation of value at risk of a share portfolio
November 2006: Q4 hedging against interest rate risk
May 2007: Q4 ratios, mainly interpretation
May 2007: Q5 various calculations of cross rates, purchasing power parity and interest rate parity
November 2007: Q2 calculations of expected cash flows and discounting for a new product and interest rate swap
These are some examples of the calculations that you should know.
Often ratios and figures will be given, and you will have to interpret them.
If you look through the CIMA Learning System, you can see examples of all the calculations you should be able to carry out and discuss.
What if my calculation is wrong?
Question
Numerical questions on paper P3 - normally based on derivatives - are very risky.
You could have done 95% of your calculation well, but - for instance - wrongly chosen one exchange rate and have the wrong answer. This would then lead you to the wrong conclusion, or rather the right conclusion based on the wrong answer.
Say 15 marks are available for the calculations and 10 marks for the interpretation. My question is: does the student get a zero mark in that case?
Answer
Believe it or not, the markers are keen to pass candidates. If you make any errors, they will only be taken into account once. You will not be penalised for that error again. That means that even if your calculations are incorrect, the markers will carefully read your conclusion and base their reading on your calculation result.
If one part of the calculation is incorrect, the markers will work through the calculation using your figures and give credit for all the parts that are correct.
You will get credit for your comments even if your calculation is very wrong and your comments are opposite to the examiner's answer - assuming your conclusion makes sense and is based on your calculation result.
Like to send a question to our exam experts?
See our article this month about sending a syllabus question to us.
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