CTP® Practice Quiz - 1
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Working capital is defined as: *
1 point
When an investment policy requires allocation among specific categories and within specified ranges this is known as: *
1 point
Benchmarking the pricing of bank products and services is a fairly common practice for most organizations. Which answer represents resources for this benchmarking? *
1 point
The Tenth National Bank requires commercial borrowers to maintain 10% of the amount borrowed in a demand deposit account. This is known as a: *
1 point
Please calculate the average collected balances required to pay for bank service charges of $1,000.00. Assume the following and round to the nearest dollar: Earnings credit rate = 6.0%;  Rather than using days in the month divided by 365 use 1/12 for the monthly factor; Reserve requirement = 10.0% *
1 point
Last year, Star Corp. reported annual revenue of $14 million, COGS of $9.8 million, and a weighted average cost of capital of 8%. At year end, it had accounts receivable of $0.6 million and accounts payable of $0.7 million. Days’ inventory was 43.2 days. What was its cash conversion cycle? *
1 point
The qualitative measures for an identified exposure include examining basic operating procedures to determine where mitigation strategies can be used, determining the contributions of fundamental business processes to the risk, and: *
1 point
A large, publicly-traded corporation would like to raise capital quickly with minimal covenant restrictions and a limited number of investors. Which capital market would the corporation use for this transaction? *
1 point
Which of the following is NOT a requirement for public companies under the Sarbanes-Oxley Act (SOX) (2002)? *
1 point
Disbursing all cash outflows via a single ZBA is an example of which forecasting factor? *
1 point
Organizations whose manufacturing operations utilize commodities may face exposure to the following risk associated with commodities: *
1 point
A large U.S. conglomerate with eighteen business units has a centralized payroll function but issues payroll checks from accounts at local banks near the business units. The treasury analyst demonstrated how banking fees could be dramatically reduced if the checks were issued from only one bank account, but the thought of reconciling one account made the accountants nervous. To ease their concern and proceed with the implementation, they agreed to utilize: *
1 point
On December 31, 2012 which one of the following liabilities should be recorded as a current liability on the balance sheet? *
1 point
A tax-paying U.S. corporation may exclude 70 to 80 percent of dividends received from stock owed in another corporation as long as the stock has been held for how long? *
1 point
A consulting company just completed its fiscal year and the following statistics summarize its current financial position: Revenues: $361,146; Net Income: $ 16,386; Cash: $182,393; Short-Term Investments: $ 18,449; Accounts Receivable: $ 21,781; Total Current Assets: $222,623; Property and Equipment: $499,085; Total Assets: $721,709; Current Liabilities: $175,859; Long Term Obligations: $ 46,895; Using the information provided above, calculate the Fixed Asset Turnover: *
1 point
A company’s payroll for the next 3 months is an example of: *
1 point
Which of the following derivatives is used for emerging currencies? *
1 point
An example of a country where a group of large clearing banks operates the payment system, rather than a central bank, is: *
1 point
The accounts payable system at EML Corp is over thirty years old and unable to transmit check issuance files to the bank. Which of the following could the treasurer utilize to reduce the occurrence of check disbursement fraud? *
1 point
An Irish firm is negotiating a EUR70M 5-year term, floating rate loan and wants to hedge the risk of interest rates rising in the future. The loan settles at 6% to rate set quarterly against LIBOR plus 250 basis points. The firm purchases a 7% cap at 25 basis points and sells a 5% floor at 25 basis points. What is the cost of the collar? *
1 point
The most important reason for cash forecasting is: *
1 point
Which of the following is a responsibility of the Securities and Exchange Commission (SEC)? *
1 point
Which of the following best determine an organization’s operational risk management strategy? *
1 point
A key control that should be addressed in a policy/procedure document is the concept of having more than one individual involved in a process to complete a task, which significantly reduces the risks from fraud and human error. This control is known as: *
1 point
A company is operating in an environment where the market expects a 10.0% rate of return on equity investments that mirror the Standard and Poor’s (S&P) Index (also known as the expected rate of return on the market portfolio). In this same environment the expected rate of return on a risk free asset such as the Treasury Bill is 2.0%. If the beta for the company’s stock is 1.3 what is its cost of equity? *
1 point
All elements below describe asset-based borrowing EXCEPT: *
1 point
Please calculate the earnings credit toward bank service fees assuming the following, and rounding to the nearest dollar: Earnings credit rate = 3.0%; Deposit float = $25,000; Rather than using days in the month divided by 365 use 1/12 for the monthly factor; Reserve requirement = 10.0%; Average Ledger Balance = $400,000 *
1 point
The following table summarizes last year’s financial results for WikkiLocks Inc.: Revenues: $16,000; COGS: $10,000; Inventory: $ 3,000; Accounts Receivable: $ 2,000; Accounts Payable: $ 1,800; What was the cash conversion cycle? *
1 point
What is the primary source of short-term financing used by many businesses? *
1 point
Which one of the following statements is true when comparing International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles (GAAP)? *
1 point
A consulting company just completed its fiscal year and the following statistics summarize its current financial position:  Revenues: $361,146; Net Income: $ 16,386; Cash: $182,393; Short-Term Investments: $ 18,449; Accounts Receivable: $ 21,781; Total Current Assets: $222,623; Property and Equipment: $499,085; Total Assets: $721,709; Current Liabilities: $175,859; Long Term Obligations: $ 46,895; Stockholders’ Equity: $498,954; Total Liabilities and Equity: $721,709; Using the information provided above, calculate the quick ratio. *
1 point
Which of the following activities is an important element of the cash flow timeline? *
1 point
The treasury analyst at EML In(c), a global manufacturer of medical test equipment, believes she can improve her cash flow forecasting accuracy by obtaining real-time visibility of internal production schedules, supplier deliveries, outgoing shipments, and customer billing activity. Which of the following would provide the information she needs? *
1 point
Market risk is the chance of change in financial market prices and rates and is basically equity price risk, interest rate risk, commodity price risk and: *
1 point
A company has issued a debt security with a somewhat low interest rate which pays interest to holders at periodic intervals and allows holders to exchange the security into shares of stock at a fixed number of shares per debt security. What type of debt security has the company issued? *
1 point
In international trade payments, a primary difference between documentary collection and a letter of credit is that the bank does not guarantee payment to the seller under documentary collection. An important issue with both documentary collection and a letter of credit is discrepant: *
1 point
What component of the option premium reflects the risk of the transaction? *
1 point
An on-us check that is processed by the bank of first deposit is: *
1 point
On Friday, the manager of a sporting goods retail store made a wire transfer to the main operating account based on his weekend sales projections. He is using: *
1 point
A collection and concentration policy should specify performance guidelines for evaluating effectiveness. One typical approach for evaluation of specific factors or benchmarks is to use: *
1 point
The Uniform Bank Performance Report (UBPR) presents three types of data for use in the financial analysis of a bank. Which of the following is not included? *
1 point
A German importer requires Euros to pay an invoice due in six months. The importer purchases a call option in Euros with a strike price of $2.60 and a premium of $.08. At a $3 spot price, what is the maximum cost the importer may incur to obtain the Euros? *
1 point
A country that uses the currency of its major trading partner rather than its own for their primary currency is: *
1 point
Continuous Linked Settlement is used to settle *
1 point
The first two digits of the ABA Number identify the: *
1 point
In the EU, there are four Euro Payment Systems: TARGET2, correspondent banking, internal networks and local clearing channels, and the Euro Bankers Association. TARGET2 is most similar to which systems in the U.S.? *
1 point
Which financial risk measurement technique uses what-if analysis? *
1 point
Currency A has a higher interest rate than currency B. Which of the following statements is true of the relationship between the currencies? *
1 point
A U.S. cable company has to continually borrow short-term because it is not collecting customer payments in a timely manner. If most of these customer payments are made via checks dropped off at the company’s branches all over the country, the company could benefit the most from: *
1 point
Which of the following is a first tier form of bank capital? *
1 point
The risk of a change in the rate of exchange between the currency in which a security is denominated and the company’s local currency is known as: *
1 point
Which of the following circumstances would require an auditor to issue an adverse opinion? *
1 point
When analyzing the financial statements of a software company, all of the following statements are likely to be true EXCEPT: *
1 point
A currency that is worth more in the forward market than in the spot market is trading a at: *
1 point
Which activities best describe the elements of collection float related to paper-based instruments? *
1 point
Operating leases, also known as service leases, are established in such a way that the lessor may maintain the equipment and retain ownership thereof at the end of the lease. These arrangements are often done on an off-balance-sheet basis, meaning: *
1 point
One key objective of PCI DSS is to: *
1 point
Which of the following provides significant liquidity to the mortgage market and benefits both borrowers and lenders? *
1 point
Inventory management is an important part of working capital management. A production/business philosophy that treats inventory as being undesirable is called: *
1 point
A consulting company just completed its fiscal year and the following statistics summarize its current financial position: Revenues: $361,146; Net Income: $ 16,386; Cash: $182,393; Short-Term Investments: $ 18,449; Accounts Receivable: $ 21,781; Total Current Assets: $222,623; Property and Equipment: $499,085; Total Assets: $721,709; Current Liabilities: $175,859; Long Term Obligations: $ 46,895; Stockholders’ Equity: $498,954; Total Liabilities and Equity: $721,709; Using the information provided above, calculate the Return on Total Assets: *
1 point
Which of the following events will be recorded on the Statement of Cash Flows as a use of cash from operating activities? *
1 point
In the United States, MMFs are typically divided into four classes. Those four classes are prime, government, treasury and: *
1 point
Which of the following should be the first step taken by the treasury manager in the financial service provider selection process: *
1 point
When dealing with customers, suppliers, investors, and regulators an especially important form of risk is: *
1 point
Which of the following does NOT try to regulate financial institutions on a global basis? *
1 point
Positive pay protects against: *
1 point
Using a quote of EUR/USD 1.6567, convert 268,000 Euros to USD: *
1 point
What is the most effective way to combat ACH Kiting? *
1 point
Which of the following instruments are NOT considered marketable securities? *
1 point
Which of the following is often the most cost-effective approach when choosing a treasury management system for global treasury departments with special needs, such as those in multicurrency environments? *
1 point
Capital budgeting decisions are commonly evaluated using which of the following? *
1 point
Northern Latitudes Mercantile Inc. is headquartered in Canada and has two foreign subsidiaries, one based in the US and the other in Japan. Each subsidiary will have intracompany balances payable to Canada next month. The treasurer expects the Canadian dollar to appreciate against the US dollar and depreciate against the Japanese yen before the balances can be paid. Which strategy should the treasurer employ? *
1 point
General control and fraud prevention measures should include which of the following: *
1 point
The EPC created what entity for the purposes of providing straight through electronic payments processing, harmonizing fees, and eliminating crossborder charges? *
1 point
A global company’s main cash management bank has branches that are unable to provide all of the banking services needed by the company in foreign countries. The company’s best option is to utilize: *
1 point
Futures and exchange-traded options offered through exchanges have less counterparty risk due to the fact that: *
1 point
Which of the following is NOT a benefit of private equity ownership of a company, compared to publicly traded equity ownership? *
1 point
Forward currency contracts are utilized when a company needs to: *
1 point
There are many financial objectives, regardless of whether the company is public or private, for profit, not for profit, or governmental. In the simplest form, the principal objective is to: *
1 point
Keegan’s is contemplating expanding their use of a newly implemented ACH payment platform. They are currently paying $8 for each wire transfer. The cost of an ACH transfer is $.50 and the funds settle on the next day. Keegan currently earns 2% (opportunity cost) on their overnight funds. What is the break-even to justify using a wire over an ACH transaction transfer amount? *
1 point
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