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Master the Certified Treasury Professional CTP Exam with Confidence!

Questions 221

An investor purchases securities that mature beyond the date when cash is required. The investor intends to sell the investment to meet the cash flow need. This strategy works best when:

Options:

A.

the yield curve is inverted.

B.

interest rates are increasing substantially.

C.

short term rates are lower than long term rates.

D.

investment prices are falling.

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Questions 222

The Fed can reduce the money supply by doing which of the following?

1. Increasing reserve requirements

2. Purchasing government securities

3. Increasing legal lending limits

4. Selling government securities

Options:

A.

1 and 2

B.

1 and 4

C.

3 and 4

D.

2, 3, and 4

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Questions 223

The Treasurer of a publicly-traded U.S. company discovers several large payments which were made from the company’s disbursement account without proper approval. These unauthorized payments represent an exposure to penalties imposed by which regulator?

Options:

A.

The Office of the Comptroller of the Currency

B.

The Office of Foreign Assets Control

C.

The Public Company Accounting Oversight Board

D.

The Financial Industry Regulatory Authority

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Questions 224

Because of the growing demand in China for oil, a transportation company decides to assume a long position on oil in hopes of generating short-term investment income. Which of the following describes the firm’s strategy?

Options:

A.

Speculation

B.

Arbitrage

C.

Hedging

D.

Risk management

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Questions 225

A company purchased merchandise that cost C$155,000 from a Canadian supplier and then resold the merchandise for US$135,000. What rate of exchange must the company have obtained to realize a gross profit of US$44,000 on this transaction?

Options:

A.

0.3259 US$/C$

B.

1.1500 US$/C$

C.

0.5871 C$/US$

D.

1.7033 C$/US$

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Questions 226

An investment is purchased for $10,000.00 that offers compounding of the first year's interest and it matures at the end of year two. If the value at maturity is $11,664.00, what is the rate of return on the investment?

Options:

A.

7%

B.

8%

C.

9%

D.

10%

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Questions 227

An organization must maintain adequate liquidity to meet:

Options:

A.

strategic objectives.

B.

five year plan.

C.

transaction requirements.

D.

defined contribution plan distributions.

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Questions 228

James Corp has a 7.98% WACC and an assumed tax rate of 30%. James Corp employed €70,000,000 of capital (long-term debt and equity) in a project that generated an operating profit of €9,500,000, after depreciation expense of €300,000. EVA in this case would be:

Options:

A.

€764,000.

B.

€1,064,000.

C.

€1,087,940.

D.

€1,274,000.

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Questions 229

As a result of an employee's intentional actions, an electronic payment to a supplier was misdirected to an unauthorized account. This is an example of which of the following types of risk?

Options:

A.

Process and technology risks

B.

Employee and technology risks

C.

Process and valuation risks

D.

Employee and process risks

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Questions 230

An international organization has decided to move its treasury operations to the head office in Paris, France. The company’s goal is to establish the treasury as the primary provider of banking services and all company financing. What would the new proposal be an example of?

Options:

A.

A hybrid treasury structure

B.

A decentralized and a re-engineered organization

C.

An in-house bank and a centralized organization

D.

An outsourced shared service center

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Questions 231

Which one of the following is true of capital repatriation for multinational companies?

Options:

A.

Payment of dividends may not be taxed by host governments.

B.

Management fees paid by the subsidiary may require negotiation with the host government.

C.

Transfer pricing can be used to locate profits in subsidiaries in high tax jurisdictions.

D.

Intracompany loans which are paid back promptly may be considered dividends.

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Questions 232

An accountant is fired after reporting to the SEC that she witnessed the CFO inappropriately reduce expenses ahead of the quarterly earnings announcement. Which of the following would apply?

Options:

A.

The accountant is protected by ‘whistle-blower’ laws.

B.

The CFO is liable for Bank Secrecy Act reporting.

C.

The accountant is in violation of Section 404 of the Sarbanes-Oxley Act.

D.

The CFO is protected by the code of ethics.

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Questions 233

Which of the following is a service typically provided by an investment custodian?

Options:

A.

Tax advice

B.

Audit service

C.

Portfolio reporting

D.

Written policy

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Questions 234

The Sarbanes-Oxley Act of 2002:

Options:

A.

created the Financial Accounting Standards Board.

B.

created the Public Company Accounting Oversight Board.

C.

created the Public and Private Corporate Governance Board.

D.

created the International Accounting Standards Convergence Board.

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Questions 235

Who has responsibility for final approval of treasury policies that have a significant impact on the organization?

Options:

A.

The board of directors

B.

The chief financial officer

C.

The treasurer

D.

The audit committee

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Questions 236

What is the primary weakness of a risk management policy that includes risk control without specifically providing a plan for risk financing?

Options:

A.

Resources are used to pay for losses that could have been prevented.

B.

Funding must be set aside for self-insurance.

C.

There is an increase in the potential for claims of negligence.

D.

Catastrophic losses could result in bankruptcy.

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Questions 237

All of the following are discounted instruments EXCEPT:

Options:

A.

preferred stock.

B.

banker's acceptance.

C.

commercial paper.

D.

Treasury bills.

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Questions 238

Which of the following prohibits price discrimination among customers where cost differences do NOT exist?

Options:

A.

Robinson Patman Act

B.

Truth in Lending Act

C.

Fair Credit Billing Act

D.

Equal Credit Opportunity Act

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Questions 239

Subtracting dividends from net income available to common shareholders is reflected as a change to which of the following balance sheet items?

Options:

A.

Treasury stock

B.

Paid-in capital

C.

Common stock at par value

D.

Retained earnings

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Questions 240

What activity should the Treasurer be most interested in if core treasury functions were to be compared within the industry or cross-industry for the purpose of identifying “best practices”?

Options:

A.

Re-engineering

B.

Outsourcing

C.

Benchmarking

D.

Six Sigma

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