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Master the Certified Treasury Professional CTP Exam with Confidence!

Questions 241

Company A purchases materials on cash-before-delivery terms, while Company B uses paid-on-production terms. Both companies are diligent with the protection of assets, but Company B has concerns with respect to transfer of title of the materials. Company B is MOST LIKELY what type of business?

Options:

A.

Manufacturer

B.

Retailer

C.

Supplier

D.

Wholesaler

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Questions 242

Without regard to costs, which of the following concentration mechanisms maximizes investment income in a multi-bank environment?

Options:

A.

Wire transfer

B.

Zero balance account

C.

ACH

D.

DTC

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Questions 243

Which of the following will MOST LIKELY be affected when a company changes its terms from net 30 to 2/10 net 30?

Options:

A.

Sales revenue

B.

Bad debt charge-offs

C.

Collection expenses

D.

Credit evaluation expenses

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Questions 244

In terms of targeting a company’s capital structure, when is it beneficial to assume a high level of financial risk?

Options:

A.

When the economy is rapidly expanding

B.

When the economy is experiencing slow growth

C.

When the company is experiencing growth

D.

When the rate of return on investments is advantageous

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Questions 245

To monitor financial institution service quality, a company would use all of the following measures EXCEPT:

Options:

A.

report cards.

B.

an earnings allowance rate.

C.

annual senior management reviews.

D.

informal reviews on day-to-day relationship management.

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Questions 246

The interest costs on commercial paper are determined by all of the following EXCEPT the:

Options:

A.

dealer fees.

B.

backup line of credit fees.

C.

rating agency fees.

D.

maturity of the paper.

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Questions 247

An employee is considering two investment strategies for his 401(k) plan:

Strategy #1: Invest all contributions in a money market fund that has returned 5% annually

Strategy #2: Invest all contributions in a stock fund that has returned 9% on average, although annual returns have varied between (2%) and 12%

Assuming that the employee makes a one-time investment of $12,000 and that both strategies continue to perform as they have historically, how much more or less could the stock fund be worth after one year compared to the money market fund?

Options:

A.

Between ($480) and $480

B.

Between ($840) and $840

C.

Between ($1,080) and $1,080

D.

Between ($1,680) and $1,680

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Questions 248

Which of the following is a major objective of treasury management?

Options:

A.

Determine the corporation’s primary financial institution.

B.

Maintain access to medium- and long-term financing alternatives.

C.

Determine the amount of float in the collection process.

D.

Maintain financial reporting compliance with GAAP.

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Questions 249

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

Options:

A.

backup systems and disaster recovery procedures.

B.

controlled disbursement procedures.

C.

standard formats for electronic submission.

D.

timetables for service implementation.

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Questions 250

A U.S. firm acquires a large U.K. manufacturer that generates high levels of cash flow in its local currency. The purchase is denominated in British pounds and is financed through the issuance of 10-year, 7.5% U.S. dollar bonds. The U.S. firm will rely entirely on the U.K. manufacturer's cash flows to fund the interest payments on the bonds. What derivative instrument would help the U.S. firm manage its FX exposure?

Options:

A.

Currency forward

B.

Currency swap

C.

Interest-rate swap

D.

Currency future

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Questions 251

To strengthen outside auditor independence with regard to publicly held companies, the Sarbanes-Oxley Act requires that:

Options:

A.

employment of staff from companies’ accounting firms be approved in advance by the audit committees.

B.

companies change accounting firms for audit services at least every seven years.

C.

accounting firms supply audit work papers annually to the SEC for their clients.

D.

the lead audit partner and audit review partner be rotated every five years.

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Questions 252

The key parties involved in a disaster recovery plan are generally classified as internal resources or external counterparties. When evaluating the risks of both parties, which of the following can be assumed?

Options:

A.

The review of internal resources takes greater importance.

B.

The infrastructure linking the parties’ systems must be considered.

C.

The disaster recovery sites of both parties must be in the same location.

D.

The systems used by both parties must be compatible.

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Questions 253

An internal auditor discovers that employees can enter and approve their own wire transfers. This practice violates what internal control?

Options:

A.

Adequate segregation of duties

B.

Accurate reporting of cash transactions

C.

Appropriate monitoring of covenant compliance

D.

Proper authorization of investment transactions

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Questions 254

Treasury policies should be approved by the:

Options:

A.

audit committee.

B.

controller.

C.

board of directors.

D.

external auditors.

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Questions 255

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

Options:

A.

discount rate.

B.

call rate.

C.

prime rate.

D.

real interest rate.

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Questions 256

The “agency problem” refers to:

Options:

A.

management’s use of a fiduciary agent for stockholders.

B.

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

C.

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

D.

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

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Questions 257

Net working capital is defined as:

Options:

A.

cash minus accrued liabilities.

B.

current assets minus current liabilities.

C.

investments minus current liabilities.

D.

total assets minus total liabilities.

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Questions 258

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

Options:

A.

more important decision process for a treasurer.

B.

less critical decision process for a treasurer.

C.

easier decision process for a treasurer.

D.

unimportant decision process for a treasurer.

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Questions 259

If the Federal Reserve Board increased the discount rate, you would expect:

Options:

A.

long-term bonds to increase more in price than short-term bonds.

B.

short-term bonds to decrease more in price than long-term bonds.

C.

long-term bonds to decrease more in price than short-term bonds.

D.

that there would be no effect on either long- or short-term bond prices.

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Questions 260

Which of the following is true when a company purchases goods using trade credit from suppliers?

Options:

A.

The buyer incurs no added cost if it pays on time.

B.

The supplier will charge interest to the buyer.

C.

The buyer should record this as a long-term liability.

D.

The supplier places a lien on the goods sold until payment.

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