CTP® Practice Quiz - 9
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Measurement of a company's liquidity includes the calculation of all of the following EXCEPT: *
1 point
Economists are forecasting a rise in gas prices within the next 3 months. Charged with the task of establishing a risk mitigation approach for the company, the CRO has determined that the company has considerable exposure to fluctuations in gas prices. In coming to this conclusion, the CRO: *
1 point
XYZ Company is a U.S. based company that has just issued some euro-denominated bonds in London. The bonds have a duration of 10 years at a rate of 3.5% with a par value of EUR 50 million. An FX swap contract was created on the date of the issuance in EUR/USD, with a spot rate of 1.2908 and a forward rate of 1.1102. This bond is subject to what type of risk? *
1 point
Which of the following global cash concentration methods would be MOST appropriate for a company with operations in the United States, Germany, Mexico, and Japan? *
1 point
The CFO asks the Treasurer to create a new collections and concentration policy for their company. Following implementation of the policy, the company finds that reporting of receivables values is taking 10% longer, with no improvement in the company's cash flow or liquidity. What step in developing the policy could have been executed better? *
1 point
Equity section of Fisher, Inc. Financial Statement; Current Year (CY); Prior Year (PY); Common Stock: (CY) $1,705,000; (PY) $1,550,000; Preferred Stock: (CY) 200,000; (PY) 150,000; Paid-in Capital: (CY) 3,740,000; (PY) 3,600,000; Retained Earning: (CY) 4,400,000; (PY) 3,800,000; Total: (CY) $10,045,000; (PY) $9,100,000; Shares Outstanding: (CY) 110,000; (PY) 100,000; If an investor paid $1,400.00 (excluding fees) for 75 shares of common stock, what was the market value of Fisher, Inc. at the time of purchase? *
1 point
Company XYZ is in its first year of operations. The company culture is conservative, and it has $500 million to invest in short-term investments. The company has a growth rate of 25% and is looking to issue an IPO in the near future. The investment manager is in the process of creating a short-term investment policy which must be approved by the board of directors. An item that should be included in the policy is: *
1 point
Which of the following could be considered a weakness of a forecast derived by regression analysis? *
1 point
Which of the following would be true for a company with high operating leverage? *
1 point
A corporate compliance officer is drafting an agenda for an ethics training session. Which of the following would NOT be an appropriate item to include? *
1 point
Which of the following are important uses of variance analysis in comparing actual cash flows with projected cash flows?;  I. Identifying unanticipated changes in inventory;  II. Enhancing short-term investment income;  III. Validating a capital budget;  IV. Identifying delays in accounts receivable collections *
1 point
XYZ Company has incurred a financially devastating event because of a hurricane at its offshore manufacturing plant. Due to the impact on liquidity, the company may not be able to survive. What should the Treasurer have done in order to assess the risk associated with this type of event? *
1 point
For ABC Company in the last fiscal year, the operating profit was $8,500,000, the tax rate was 33%, the total capital was $75,000,000, and the WACC was 9.7%. What was the EVA for ABC? *
1 point
The Treasurer at ABC Company currently uses an in-house company-processing lockbox center. The Treasurer has asked for an analysis to determine the major advantage of using a traditional check/mail-based lockbox system. ABC receives 287,000 payments per month and hired seven additional staff members to process the payments in-house. Additionally, $389,000 was invested in the equipment used to process the payments and NSF checks have decreased 7% since using the in-house center. The equipment's current market value is equal to its book value. What major advantage should the analysis indicate? *
1 point
A treasury manager has $5 million that is not needed for 6 months. The treasury manager has decided to invest the funds in a liquid instrument, using the current portion of a 5-year AA rated corporate bond that is subject to U.S. Securities and Exchange Commission (SEC) regulations. In what market would the treasury manager purchase this investment? *
1 point
A small regional bank is losing market share in fiduciary services and the CEO has decided to scale back the trust department. Which of the following is considered a core service of a trust department? *
1 point
A U.S. bank regularly transmits international payments to European based XYZ Bank. The payments flow through an intermediary bank. Recently regulators audited the intermediary bank and discovered the bank may be unknowingly facilitating illegal activities. What payment method was MOST LIKELY used? *
1 point
A company can compare its account analysis statements in order to: *
1 point
Over the past 3 years XYZ Company has expanded into multiple countries and significantly grown its banking relationships. The company now incurs significant expenses related to payment transaction costs and maintaining multiple bank connections. What should the company use to combat these rising costs? *
1 point
The credit management function is responsible for: *
1 point
What is the reserve-requirements provision of the Federal Reserve Act of 1913 known as? *
1 point
A company uses a dividend capture strategy to: *
1 point
Which function involves evaluating alternative projects in relation to one another and in relation to the company's cost structure? *
1 point
All of the following are examples of treasury management system transactions for liquidity management EXCEPT: *
1 point
The time between when the payor mails the check and the payee receives available funds is known as: *
1 point
ABC Ltd. uses a third party lockbox provider to collect and clear its paper receivables. A customer disputes the price charged for a binding machine and issues a check to ABC Ltd. for 50% of the balance due, noting 'paid in full' on the face of the check. The third party provider does not bring the check to ABC's attention prior to depositing it. Which regulation allows ABC to attempt to collect the remaining balance? *
1 point
Which two of the following are necessary to calculate average collected balances?; I. Deposit float; II. Reserve requirements; III. Ledger balance; IV. Earnings credit rate *
1 point
To arrive at today's projected closing cash position, a cash manager starts with: *
1 point
Establishing the authority to open bank accounts is the responsibility of: *
1 point
Trade terms are renegotiated under e-commerce in order to: *
1 point
Which of the following statements is prepared monthly and summarizes a company’s transaction activity, average balance, and service charges? *
1 point
A hamburger patty supplier receives an order from ABC Burgers located in Minnesota. The supplier's policy is to bill upon fulfillment of the order and not at delivery. ABC Burgers pays upon receipt of goods. A blizzard has closed the manufacturing facility and roads; delivery will be delayed by two days. Which type of float occurs between the receipt of an invoice by ABC Burgers, including the credit period, and the time ABC Burgers' account is debited? *
1 point
For a defined benefit plan, *
1 point
"Fees" in Country Y, which would be considered bribes in the United States, are ingrained in the commercial culture. A U.S. company doing business in Country Y: *
1 point
XYZ Company has decided to purchase a close competitor. This acquisition would make XYZ Company the 4th largest in its industry allowing it better purchasing power and greater distribution channels. After completing the M&A analysis, it is determined that the combined companies would produce a 40% increase in revenue, reduce manufacturing costs by 30%, but would increase current liabilities by 27%. Which of the following would keep the acquisition from happening? *
1 point
Buying a security with the intent of selling it prior to its maturity date to increase the return is an example of: *
1 point
Which of the following is a KEY objective when instituting a collection and concentration policy? *
1 point
Which of the following is a typical overnight use of excess cash? *
1 point
Which of the following ACH formats is commonly used for consumer payments such as deposits of payroll? *
1 point
If a company uses accrual accounting, deferred taxes are reported on which financial statement? *
1 point
Company XYZ has an underfunded defined benefit plan. Company XYZ is required to provide filings for this plan to all of the following EXCEPT: *
1 point
All of the following would encourage a company operating nationwide to develop multiple banking relationships EXCEPT: *
1 point
What should a company's senior management consider in their payment policies to eliminate the co-mingling of funds for payables, receivables and foreign exchange transactions? *
1 point
What do MOST companies try to maintain due to the signaling effect and clientele effect? *
1 point
The Cash Manager of XYZ Corporation is trying to determine today's closing cash position in order to make an investment or borrowing decision. The Cash Manager anticipates wiring $55,000 in tax payments and $63,000 in supplier payments today. Additionally, the Cash Manager is aware that a $15,000 wire was received today into the company's concentration account from a customer and that XYZ Corp. will have to fund a bond interest payment of $200,000 in three days. Opening bank balance: $27,000; Today's controlled disbursement clearings: $125,000; ACH sweep receipts from depository accounts: $75,000; Short-term investment maturing today: $101,000. Using the information, as well as the data in the table, what is the closing cash position for XYZ Corporation? *
1 point
With respect to the Sarbanes-Oxley Act, a company may avoid additional reporting requirements by: *
1 point
Which of the following are basic security issues to be considered in evaluating a treasury management system?; I. Data recovery; II. Anti-virus protection; III. Database access controls; IV. Data integration *
1 point
Company ABC experienced a loss in the past when an employee in the treasury department was able to transfer $1.5 million to a personal account offshore. The company is working with a security agent to prevent this from happening in the future. ABC also accepts a large number of checks as payment. The agent has suggested upgrades to ABC's payment process. What step should be taken to help mitigate this type of risk in the future? *
1 point
Which of the following contributes MOST to the marketability of a security? *
1 point
A 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 present value of receiving full payment on day 30? *
1 point
ABC Company is a national retail company and uses XYZ Bank for its collections and payroll services. XYZ has recently experienced financial problems; what is the greatest risk to ABC Company? *
1 point
Which of the following statements BEST applies when evaluating fees in an RFP for bank services? *
1 point
A company has grown quickly in the euro zone market. It wants to maximize its excess cash. Which would be the BEST method of concentrating funds? *
1 point
XYZ Company has one inventory supplier, and title to inventory is transferred to the company during the manufacturing process. Which of the following BEST describes XYZ’s relationship with its supplier? *
1 point
A daily short-term forecast and variance analysis for LMN, Inc. is updated with relevant trends and actual data every Monday. Upon review, the Treasurer assessed that sales were higher than forecasted, inventory was up and yields being earned on excess cash were lower. The MOST important reason for this cash forecast process is: *
1 point
Which of the following statements is true about futures contracts? *
1 point
A convenience store chain would typically use which of the following types of collection systems? *
1 point
A good credit rating has which of the following effects on debt?; I. Improved marketability; II. Decreased cost of funds; III. Decreased maturity; IV. Increased dealer fees *
1 point
The renegotiation of trade payment terms in an e-commerce environment should include which of the following? *
1 point
A new retail chain has decided to offer 3 payment methods: cash, cards and checks. It was determined that card payments would be the biggest sales driver and projects have been scheduled accordingly. To be in line with this strategy, which of the following should be the priority? *
1 point
Which of the following is NOT a drawback to using ROI as a performance measure? *
1 point
Insurance companies often use which of the following payment instruments? *
1 point
Which of the following is NOT an operational risk? *
1 point
A currency is said to trade at a discount if it is worth: *
1 point
Under the standards of corporate governance adopted in 2002, an independent director must: *
1 point
Netting is used by which of the following as a cross-border payment technique? *
1 point
PFA Corporation has used regression analysis based on historical data to determine the estimated portion of dollars of checks issued that will clear on any given business day.; Day 1: 15%, Day 2: 45%, Day 3: 25%; If PFA issued $150,000 in checks and $7,500 worth of checks cleared on day 5, what value of checks will be estimated to clear on day 4? *
1 point
A merchant presents 2 different batches of credit card transactions for processing, each batch has the same dollar value and number of transactions, but the fees are different. Which of the following explains why? *
1 point
Company XYZ uses exponential smoothing to forecast its daily lockbox receipts. With the help of a statistical computer program, the company has determined that the smoothing constant is 0.35.;  Actuals on Day 1: $25,000; Day 2: $27,000; Day 3: $27,000; Day 4: $26,000; Day 5: $28,000; Day 6: $30,000; 5-Day Moving Average on Day 6: $26,600.; Using the data, what is the exponential smoothing forecast for Day 7 (rounded to the nearest whole $)? *
1 point
An analyst is performing a lease versus buy analysis on a corporate jet. In the evaluation, a cost is relevant if it is: *
1 point
A company has negotiated a credit facility with the following terms: $5,000,000 line of credit; $3,000,000 average borrowing; 30 basis point commitment fee on the unused portion of the line; Interest rate on advances is 1-month LIBOR plus 4%; 1-month LIBOR is currently 2%; What is the annual interest rate on the line of credit? *
1 point
Which of the following will directly increase a company's cost in a fee-only bank relationship? *
1 point
The School of Cash Management is dealing with a large bank that has been highly rated by Moody's and S&P. The School has a purchasing card program in place and is not using a highly secure student registration data base. Both the School and the bank have highly automated payment processes. Based on the automation factor, the School should be MOST concerned about which of the following types of fraud exposure? *
1 point
From a buyer's perspective, which of the following types of float would be eliminated if checks were replaced by electronic payment methods? *
1 point
The goal of a successful investor relations program is to ensure: *
1 point
Which of the following is an example of off-balance-sheet financing? *
1 point
A cash manager invests in Treasury bills for which of the following reasons? *
1 point
Optimal dividend policy is one that does all of the following EXCEPT: *
1 point
A company has a $2 million line of credit requiring a 5% compensating balance on usage. For the next year, the company projects a usage of 75% and a 10.375% interest rate. If the balance requirement is eliminated, by how many basis points will the company's effective interest rate be reduced? *
1 point
Company XYZ is a manufacturer of industrial equipment and has enjoyed a large percentage increase in profits from a small increase in revenues. Sales recently plummeted resulting in steep decline in profitability. Which of the following BEST describes the cost structure of the company? *
1 point
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