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

Questions 161

Which of the following is NOT one of the three goals of a disbursement system?

Options:

A.

Bank relationship management

B.

Information access

C.

Fraud prevention

D.

Centralize payments

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Questions 162

BF Company, a manufacturer of food products, reported financial information shown in the Exhibit for the end of the year. BF Company is subject to covenants in its commercial paper program. It is in compliance with which of the following?

Options:

A.

Maximum long-term debt to capital of 52.5%

B.

Minimum working capital of $10,000

C.

Maximum dividends of 50% of net income

D.

Minimum cash flow to total debt of 45%

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Questions 163

Which of the following statements are true about collected balances?

I. They can be lower than ledger balances.

II. They are influenced by the bank's availability schedule.

III. They exclude negative account balances.

IV. They may generate an earnings credit.

Options:

A.

II and III only

B.

I, II, and IV only

C.

I and IV only

D.

II, III, and IV only

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Questions 164

XYZ Company is a net borrower. Its cost of funds is 5.0%, its earnings credit rate is 3.0%, and the reserve requirement is 10%. Average service fees are $50,000 per month. Its average ledger balance is $2,000,000, and its average collected balance is $1,000,000. What are the collected balances required to pay for services during a 30-day month?

Options:

A.

$12,166,667

B.

$13,518,519

C.

$20,277,778

D.

$22,530,864

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Questions 165

An auto manufacturing plant in Michigan has high scheduled demand for its product. If the company does not have a long-term contract for raw materials, what type of exposure could it face?

Options:

A.

Delivery

B.

Transaction

C.

Economic

D.

Credit

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Questions 166

The year-end income statement and balance sheet accounts for a company as of December 31, Year 1 are shown in the Exhibit.

If no changes occurred in the current asset and current liability account balances from the beginning of the period, except for cash, what was the net cash flow from operations for Year 1?

Options:

A.

$350,000

B.

$365,000

C.

$390,000

D.

$400,000

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Questions 167

Operational risk is defined as the risk of direct or indirect losses resulting from external events or failure of internal resources. As treasury departments maintain legacy systems that must be integrated into more complex technology, one would expect that:

Options:

A.

internal risks would increase due to the combination of manual and automated processes.

B.

external risks would decrease as the newer technology will offer more security.

C.

all risks would remain unchanged, as long as the same process controls are maintained.

D.

operational risks would decrease with the adoption of new technology.

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Questions 168

A United States company must remit a dollar royalty payment to its Japanese subsidiary. Cash settlement of the payment would typically be made by which of the following?

Options:

A.

SWIFT

B.

ACH

C.

CHIPS

D.

Giro system

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Questions 169

Which of the following is a disadvantage of e-commerce?

Options:

A.

Reduced collection float

B.

Reduced disbursement float

C.

Reduced accounts receivable cycle

D.

Reduced inventory cycle

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Questions 170

On a company’s financial statements, an increase in accounts receivable is reflected as a(n):

Options:

A.

decrease in current assets.

B.

increase in current liabilities.

C.

source of cash on the cash flow statement.

D.

use of cash on the cash flow statement.

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Questions 171

The following information about a company is at the end of its fiscal year.

CTP Question 171

The before-tax cost of long-term debt is 10% and the cost of equity is 12%. The marginal tax rate is 35%. The company's current ratio is:

Options:

A.

0.46.

B.

0.59.

C.

0.93.

D.

1.37.

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Questions 172

Company A anticipates the following cash inflows and outflows for the next three months:

CTP Question 172

If the company's treasurer is preparing a cash-flow projection for Month 2, and he is focusing purely on items that can be projected with a fair degree of certainty, what will the net projection be?

Options:

A.

($119,000)

B.

($104,000)

C.

$131,000

D.

$146,000

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Questions 173

The PRIMARY difference between defined benefit and defined contribution pension plans is whether the employee or the employer:

Options:

A.

receives the tax reduction benefits of the plan.

B.

decides which mutual funds are included in the plan.

C.

bears risk of a shortfall of the investment results in the plan.

D.

hires investment managers for the plan.

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Questions 174

All of the following are objectives of credit management EXCEPT:

Options:

A.

evaluating customer creditworthiness.

B.

preparing cash flow forecasts.

C.

maintaining up-to-date records of accounts receivable.

D.

initiating collection procedures.

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Questions 175

Companies implement EDI in order to realize which of the following benefits?

I. Decreased error rates

II. Decreased order lead time

III. Improved productivity

IV. Improved cash forecasting

Options:

A.

I and II only

B.

I, III, and IV only

C.

II, III, and IV only

D.

I, II, III, and IV

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Questions 176

According to the Capital Asset Pricing Model, which of the following would increase the required rate of return, given a beta of 1?

Options:

A.

A decrease in the tax rate

B.

An increase in the T-bill rate

C.

A decrease in the expected market return

D.

An increase in the company’s stock price

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Questions 177

What type of insurance provides payments to an organization if it is unable to continue operations for some period due to an unforeseen event?

Options:

A.

Casualty

B.

Property

C.

Difference in conditions

D.

Business interruption

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Questions 178

A measure of the incremental impact of a company's investments on market capitalization is known as:

Options:

A.

weighted average cost of capital.

B.

economic value added.

C.

return on equity.

D.

working capital turnover.

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Questions 179

The delay between the time a check is deposited and the time the company's account is credited with collected funds is known as:

Options:

A.

collection float.

B.

mail float.

C.

processing float.

D.

availability float.

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Questions 180

Which of the following is normally MORE significant for a corporation?

Options:

A.

Unintentional actions by employees

B.

Defalcation events by employees

C.

Firewall breaches by employees

D.

Sarbanes-Oxley violations by employees

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