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Your Path to Success: How to Pass the AFP CTP Certified Treasury Professional Exam

Questions 181

Advantages of writing checks locally on a centralized disbursing bank include all of the following EXCEPT which statement?

Options:

A.

It minimizes the number of banks.

B.

It provides opportunity for volume discounts on bank charges.

C.

It reduces idle balances.

D.

It decreases administrative costs.

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Questions 182

Refer to the following information about a company at the end of its fiscal year.

CTP Question 182

The before-tax cost of long-term debt is 10% and the cost of equity is 12%. The marginal tax rate is 35%.

What is the company's long-term debt to total capitalization ratio?

Options:

A.

0.44

B.

0.67

C.

0.73

D.

0.78

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Questions 183

Which of the following is an example of using cash forecasting for liquidity management?

Options:

A.

Establishing an accounts receivable collection schedule

B.

Scheduling investment maturities

C.

Assessing the degree of foreign currency exposure

D.

Determining a company's target capital structure

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Questions 184

A comprehensive payables service can do all of the following EXCEPT:

Options:

A.

send checks to a vendor.

B.

wire funds to a bank.

C.

set up ACH transfers.

D.

concentrate lockbox deposits.

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Questions 185

The seller’s cost of capital is 12%. The average credit sale is $200,000, and the credit terms are 2/10, net 30. What is the seller’s net benefit (loss) if the buyer takes the discount and pays by day 10?

Options:

A.

$3,986.89

B.

($3,986.89)

C.

$2,688.93

D.

($2,688.93)

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Questions 186

Which of the following are examples of covenants in loan agreements?

I. Financial ratios

II. Corporate resolutions

III. Borrower limitations

IV. Borrower obligations

Options:

A.

I and III

B.

II and III

C.

I, II, and IV

D.

I, III, and IV

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Questions 187

Components of a field banking system include which of the following?

I. Local bank

II. Concentration bank

III. Lockbox bank

Options:

A.

I only

B.

I and II only

C.

II and III only

D.

I, II, and III

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Questions 188

Which of the following instruments is sold at multiple price bid auctions?

Options:

A.

Commercial paper

B.

Certificates of deposit

C.

Treasury Bill

D.

Money market fund

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Questions 189

Which of the following can be considered key responsibilities of daily cash management?

I. Overseeing compensation for bank services

II. Management of short-term borrowing and investing

III. Projecting future cash shortages and surpluses

Options:

A.

I only

B.

I and II only

C.

II and III only

D.

I, II, and III

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Questions 190

Which of the following companies would be MOST LIKELY to use a wholesale lockbox?

Options:

A.

A chemical company

B.

A credit card company

C.

A cable television company

D.

A mortgage company

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Questions 191

The term "collection float" is defined as the delay between the time the payor:

Options:

A.

prepares the check and the payee deposits the check.

B.

mails the check and the payee deposits the check.

C.

mails the check and the check is charged to the payor's account.

D.

mails the check and the payee receives the available funds.

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Questions 192

A retail lockbox system is characterized by which of the following?

I. An emphasis on processing cost

II. Detailed information on discounts taken

III. Small-dollar amounts per invoice

IV. Multiple invoices per payment

Options:

A.

I and II only

B.

I and III only

C.

I, II, and III only

D.

II, III, and IV only

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Questions 193

The purpose of cash letters is to:

Options:

A.

arrange currency deliveries from the Fed.

B.

request payment under standby letters of credit.

C.

collect merchant charge-card sales.

D.

facilitate the clearing of paper checks.

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Questions 194

Which of the following statements is true about futures contracts?

Options:

A.

They can be created for any asset over any period of time and for any amount.

B.

They are marked-to-market on a daily basis.

C.

Their margin requirements are normally 50%.

D.

Their losses are limited to the initial investment divided by the margin requirement.

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Questions 195

Which of the following functions is LEAST likely to be part of a cash manager's responsibilities?

Options:

A.

Funds movement

B.

Bank compensation

C.

Forecasting

D.

Long-term financing

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Questions 196

Treasury management systems help cash managers do which of the following?

I. Reduce borrowing expenses

II. Initiate transfers

III. Determine cash position

IV. Obtain account balances

Options:

A.

I and IV

B.

II and III

C.

I, III, and IV

D.

I, II, III, and IV

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Questions 197

Which of the following contributes MOST to the marketability of a security?

Options:

A.

An investment-grade rating

B.

An irrevocable letter of credit guarantee

C.

A return at or above the yield curve

D.

A large, active secondary market

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Questions 198

The credit management function is responsible for:

Options:

A.

establishing the bank network.

B.

forecasting cash flow.

C.

approving customers.

D.

concentrating lockbox receipts.

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Questions 199

The time from the deposit of a check in a bank account until the funds can be used by the payee is known as:

Options:

A.

collection float.

B.

mail float.

C.

processing float.

D.

availability float.

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Questions 200

All of the following are differences between Fedwire and ACH EXCEPT:

Options:

A.

ACH per item transaction costs are less.

B.

ACH transactions have delayed settlement.

C.

ACH transactions involve more consumer payments.

D.

ACH items have no credit risk.

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