AFP CTP Exam Questions Free Practice Test

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Viewing questions 101-120 out of questions

Questions # 101:

A treasurer is monitoring the yield curve through a service provider (like Reuters) and notices that it is moving from downward sloping to upward sloping. Based on this information, the treasurer should consider:

Options:

a commercial paper program.

a short-term borrowing facility.

interest rate collars.

a variable rate long term facility.

Questions # 102:

A main characteristic of a company with regional offices using a centralized treasury function is:

Options:

high level of control.

increased borrowing costs.

centrally determined depository accounts.

increased operating costs.

Questions # 103:

Consolidation and specialization in the financial services industry have made financial institution and financial service provider selection a(n):

Options:

more important decision process for a treasurer.

less critical decision process for a treasurer.

easier decision process for a treasurer.

unimportant decision process for a treasurer.

Questions # 104:

A company’s credit agreements or loan covenants may require:

Options:

minimum ratings for insurance carriers.

high deductible levels and risk retention in order to minimize premium payments.

outsourcing of the claims approval and payment process to an insurance company.

risk management staff to work directly with underwriters to reduce commission payments.

Questions # 105:

In order to be defined as independent, a corporate director:

Options:

cannot have owned preferred stock shares in the company.

cannot have a material relationship with the company.

cannot meet regularly with executive management outside of board meetings.

cannot have been an employee with the company during the past three years.

Questions # 106:

An airline wants to lock in the price of the jet fuel it needs to purchase to satisfy the peak in-season demand for travel. The airline wants to manage its exposure to fluctuations in fuel prices. What type of exposure is this?

Options:

Translation

Delivery

Commodity

Speculative

Questions # 107:

Banks often control information flow, records and assets, therefore it is critical that banks have:

Options:

backup systems and disaster recovery procedures.

controlled disbursement procedures.

standard formats for electronic submission.

timetables for service implementation.

Questions # 108:

One of the PRIMARY ways the Fed addresses systemic risk is by:

Options:

assigning passwords and PINs to identify authorized users of its Fedwire system.

establishing intra-day credit limits for ACH originators.

setting minimum reserve requirements for its member banks.

setting daylight overdraft limits for its member banks.

Questions # 109:

Disbursement float includes which of the following three float time intervals?

Options:

Mail, processing, and availability float

Mail, invoicing, and availability float

Mail, processing, and clearing float

Mail, invoicing, and clearing float

Questions # 110:

The rate of interest commercial banks charge their best credit rated customers is called the:

Options:

discount rate.

call rate.

prime rate.

real interest rate.

Questions # 111:

Some treasury management systems are capable of initiating investment purchases and loan drawdowns automatically. The automating of these transactions is related to which of the following treasury management functions?

Options:

Payment management

Liquidity management

International trade management

Capital budget management

Questions # 112:

A company expects the U.S. dollar to depreciate in value compared to the British pound. The company will have a British pound payment to make in five months. The company would MOST LIKELY buy:

Options:

a U.S. dollar call.

a U.S. dollar put.

a British pound call.

a British pound put.

Questions # 113:

A national retailer’s cash management system includes a field deposit system using multiple banks. To limit the impact of a failure of one of these banks, a cash manager should:

Options:

consolidate all accounts at one bank.

use wire transfers for concentration.

monitor each bank’s credit policies.

concentrate cash on a regular basis.

Questions # 114:

Unrealized holding gains and losses arise when trading securities are:

Options:

marked-to-market and are reported under current income.

marked-to-market and are reported under retained earnings.

offset by the gains and losses of the item being hedged.

recorded on the anniversary date of the purchase.

Questions # 115:

A company has large, ongoing short-term financing requirements with a maximum horizon of 250 days. It has a good credit rating and would like to use the least expensive source of short-term debt to finance its needs. The Treasurer might recommend which of the following?

Options:

Commercial paper with a backup line of credit

Asset sales through factoring of receivables

A committed line of credit with compensating balances

A single payment note secured by marketable securities

Questions # 116:

The goal of investor relations is to:

Options:

ensure that a company’s securities achieve a fair valuation in the marketplace.

ensure equity analysts have all available company information at any point in time.

maintain the company’s stock listing on the NYSE.

make sure all shareholders cast a vote at the annual meeting.

Questions # 117:

A company has negotiated a credit facility with the following terms:

$5,000,000 line of credit

$3,000,000 average borrowing

30 basis point commitment fee on unused portion of line

Interest rate on advances is 1-month LIBOR plus 4%

1-month LIBOR is currently 2%

Compensating balance requirement of 20% on the outstanding borrowings

What is the effective annual borrowing rate for the line of credit?

Options:

6.0%

6.2%

7.8%

9.3%

Questions # 118:

The “agency problem” refers to:

Options:

management’s use of a fiduciary agent for stockholders.

a large and active institutional investor base acting on behalf of individual investors.

stockholders who allow management to take actions that will benefit management.

the internal audit function reporting to the audit committee of the board instead of to management.

Questions # 119:

For a retirement plan to be qualified under ERISA, employer and employee contributions must be:

Options:

invested to maximize portfolio return.

placed in a separate fund held by a third party.

placed with a professional investment manager.

invested to provide a defined benefit for plan participants.

Questions # 120:

The CFO of a growing company has decided that it would be prudent to insure the company against potential loss from dishonest acts of employees. The treasurer has been given the responsibility of selecting and negotiating the type and amount of protection required. After analyzing the overall risk to the company, the treasurer decides that the greatest exposure to this type of risk is within the cash management function of the company. The MOST appropriate type of protection would be:

Options:

fidelity.

crime.

blanket.

fiduciary.

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