Summer Special 60% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: bestdeal

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

Questions 41

A company has six fraudulent checks clear its primary disbursement account for a total of $7,652. The bank agrees to split the loss with the company to maintain a good relationship. As a condition of sharing the expense, the bank requires the company to establish positive pay on its disbursement accounts or have the company absorb the losses on future fraudulent payments.

What type of risk financing technique is the bank using?

Options:

A.

Crime insurance

B.

Self-insurance

C.

Risk retention

D.

Risk transfer

Buy Now
Questions 42

A company with $50 million in foreign assets decides to increase its foreign debt by $40 million for a debt ratio of 80%. This action will reduce which exposure?

Options:

A.

Hedged

B.

Economic

C.

Transaction

D.

Translation

Buy Now
Questions 43

A bank is evaluating the credit risk for a company seeking to optimize costs and originate a high volume of outgoing ACH payments. What is the BEST provision the bank should establish to control its credit exposure?

Options:

A.

An intraday credit limit for the company

B.

A limit on the number of items processed per day

C.

An overdraft facility for the company

D.

A standby letter of credit for the company

Buy Now
Questions 44

JKL Company has been successful in shortening the time associated with its mail float, processing float and availability float. JKL Company will experience which of the following as a result of these improvements?

Options:

A.

Decrease in its opportunity cost

B.

Increase in its earnings rate

C.

Increase in its collection float

D.

Decrease in its NSF charges

Buy Now
Questions 45

Making payments through electronic payments networks can be a part of a treasury management system’s functionality, but it is subject to numerous constraints. Which of the following is a true statement of those constraints?

Options:

A.

The process is easy for the payee but very intensive manually for the payor.

B.

Negotiation of trade terms is required, but float terms are excluded.

C.

Remittance detail, whether a lot or a little, can be easily included with all payment forms.

D.

Collecting payment-routing details, and populating these into the software, is a significant task.

Buy Now
Questions 46

A manager has prepared an analysis of five investment alternatives. Prior to selecting which alternative to invest funds in, the manager calculated the anticipated return for all options. The manager is only going to invest in one alternative. The four investments that are not chosen are:

Options:

A.

a cost of capital.

B.

a loss of leverage.

C.

an opportunity cost.

D.

a cost benefit.

Buy Now
Questions 47

The treasury manager of an auto-parts manufacturer has noticed that checks were sent to a foreign individual not on the approved vendor list. The payables manager has explained the payments but did not provide an invoice. The treasury manager did no further research and is later disciplined for:

Options:

A.

not reporting suspicious activity under the USA Patriot Act.

B.

not purchasing enough surety insurance.

C.

ignoring International Accounting Standards Board regulations.

D.

not implementing “Check 21.”

Buy Now
Questions 48

Which of the following would be true for a company with high operating leverage?

Options:

A.

Its cost of goods sold does not increase as revenues increase.

B.

It has high variable costs per unit sold.

C.

If revenues increase marginally, it can achieve a large percentage increase in profits.

D.

Its semi-variable costs do not have a fixed cost component.

Buy Now
Questions 49

Which of the following is true of return on investment (ROI)?

Options:

A.

It includes a charge for the cost of capital in a project.

B.

It is commonly used to calculate after-tax profitability.

C.

It may cause management to accept a project with positive NPV.

D.

It is calculated as profit per dollar of invested capital.

Buy Now
Questions 50

What is the premium (price) for an oil contract, if the following conditions are present?

LIBOR rate of 5%

Out of the money cost of $3

Strike price is $4

In the money price of $1

Speculative premium of $2

Options:

A.

$3

B.

$5.25

C.

$7

D.

$7.35

Buy Now
Questions 51

A small for-profit, start-up company is designing a retirement plan with the goal of minimizing costs and operating income volatility while providing a qualified retirement savings vehicle. Which of the following would be the BEST choice?

Options:

A.

Defined benefit plan

B.

Internal Revenue Code 401(k) plan

C.

Hybrid plan

D.

Internal Revenue Code 403 (b) plan

Buy Now
Questions 52

A company with high operating leverage reduces its average cost per unit by 20% as its sales volume increases by 40% annually. This an example oF.

Options:

A.

low fixed costs.

B.

low variable costs.

C.

economies of scale.

D.

equal distribution of fixed and variable costs per item.

Buy Now
Questions 53

EML Inc., which has $600 million in outstanding debt, is preparing to issue commercial paper in excess of $100 million within the next six months. The new assistant treasurer has recently spent time getting to know the issuing and paying agent, the rating agency analyst, and the legal counsel, and has been following the financial markets. What is this is an example of?

Options:

A.

Benchmarking with peers

B.

External collaboration

C.

Decentralized control

D.

Risk transfer

Buy Now
Questions 54

Which of the following would be considered insurance risk management services?

Options:

A.

Information-system consultants who upgrade loss controls

B.

External auditors who are hired to review financial statements

C.

IT professionals who ensure the treasury workstation properly converts FX

D.

Risk group that recommends the CFO approve SOX 404 compliance

Buy Now
Questions 55

Company ABC, with a current debt rating of BBB- from Standard & Poor’s, is negotiating a new revolving credit agreement with its lenders. The company anticipates closing on a small acquisition within a year of executing this new agreement and would like maximum flexibility to determine its capital structure. The company is MOST concerned about the lenders’ inclusion of A.

Options:

A.

ratings trigger.

B.

growth rate covenant.

C.

change in control covenant.

D.

limit on internal financing.

Buy Now
Questions 56

XYZ Inc. is a publicly traded company with revenues of $1B and an operating profit of 7.5%. The treasury organization consists of a treasurer and an assistant treasurer. The assistant treasurer is responsible for the creation and approval of all payments. The treasurer is responsible for compilation of the financial statements. Under Section 404 of the Sarbanes-Oxley Act, what should be viewed as a concern?

Options:

A.

Audit committee governance

B.

Segregation of duties

C.

Subcertification

D.

Signature on SEC Form 10-K

Buy Now
Questions 57

Kensley Biscuit Company Ltd. decides to invest £125,000 in new packaging equipment to help it keep up with increased demand. As a result of this investment, the company’s annual profit improves by £11,763. If Kensley’s cost of capital is 8.25% and its corporate tax rate is 42%, what is its residual income (RI) from the investment?

Options:

A.

£842

B.

£970

C.

£1,451

D.

£11,763

Buy Now
Questions 58

Two months after a government overthrow, the new Minister of Industry and Culture took over the country’s largest steel company and compensated the owners at 50% of book value. What is the government’s action called?

Options:

A.

Consolidation

B.

Deregulation

C.

Expropriation

D.

Nationalization

Buy Now
Questions 59

An analyst is performing a lease versus buy analysis on a corporate jet. In the evaluation, a cost is relevant if it is:

Options:

A.

tied to inflation.

B.

different in each scenario.

C.

considered a sunk cost.

D.

unlikely to be incurred.

Buy Now
Questions 60

A company is looking to improve its collection rate of returned checks. If the company implements re-presented check entry (RCK) with its bank, it might see a reduction in what type of returned items?

Options:

A.

Consumer payments less than $2,500

B.

Corporate payments less than $2,500

C.

Consumer payments more than $2,500

D.

Corporate payments more than $2,500

Buy Now