A fully updated 2021 CTP Exam Dumps exam guide from training expert VCEPrep
Provides complete coverage of every objective on exam and exam preparation CTP
NEW QUESTION 419
Which of the following is NOT true for both bankers' acceptances and trade acceptances?
- A. They both transfer the buyer's credit risk to a third party.
- B. They are both less expensive forms of financing than loans.
- C. They both may be sold to an investor at a discount prior to maturity.
- D. They are both used to finance the shipment of goods.
Answer: A
NEW QUESTION 420
On a daily basis, the cash manager is responsible for all of the following EXCEPT:
- A. initiating funds transfers.
- B. executing investment and/or borrowing decisions.
- C. reviewing bank service fees.
- D. determining the cash position.
Answer: C
NEW QUESTION 421
A company can use all of the following documents to establish a relationship with a bank EXCEPT:
- A. account analysis statements.
- B. signature cards.
- C. account resolutions.
- D. service agreements.
Answer: A
NEW QUESTION 422
A company employs several short-term credit facilities at any one time to meet its liquidity needs and has consistently demonstrated the ability to service this debt as required. However, because of a temporary breach of a financial covenant of one agreement, all of the company's credit facilities were declared in default. All the credit agreements must have had which of the following types of clause?
- A. Technical default
- B. Material adverse change
- C. Discretionary
- D. Cross-default
Answer: D
NEW QUESTION 423
A company wishes to monitor and control office expenses incurred by its employees. Which of the following offers the BEST method of providing the employees freedom to choose different vendors while maximizing spending control?
- A. Stored value cards
- B. Debit cards
- C. Travel cards
- D. Purchasing cards
Answer: D
NEW QUESTION 424
A lockbox system is characterized by which of the following?
- A. Relatively few collection points
- B. A large number of cash deposits
- C. Limited or no deposit information reporting
- D. Processing of documentary collections
Answer: A
NEW QUESTION 425
A company is experiencing the following long-term trend on a month-over-month basis:
With all other income, expenses, long-term assets and liabilities remaining stable, this trend would MOST LIKELY prompt what action by the company?
- A. Factoring accounts receivable
- B. Repaying short-term debt
- C. Financing working capital requirements
- D. Reducing labor costs
Answer: B
NEW QUESTION 426
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
- A. II and III
- B. I and IV
- C. I and II
- D. I, II, and III
Answer: C
NEW QUESTION 427
A multinational company owns a United Kingdom subsidiary that has total assets equal to GBP1 million and intercompany loans due to the parent company equal to $1 million. It would like to undertake a balance sheet hedge of the U.K. subsidiary's GBP liability because it expects a depreciation of the pound. Given these circumstances, which of the following actions would be appropriate?
- A. Take no action because exchange rates cannot be predicted.
- B. Borrow GBP from a U.K. bank to repay the intercompany dollar debt.
- C. Exchange rates are fixed and thus no losses should occur.
- D. Borrow USD from a U.K. bank to repay the intercompany dollar debt.
Answer: B
NEW QUESTION 428
Which of the following is a component of a company's operating budget?
- A. Long-term debt
- B. Shareholders equity
- C. Capital investments
- D. Accounts receivable
Answer: D
NEW QUESTION 429
The cash manager for a company is creating a list of transactions that should be considered when determining the daily projected closing cash position. Which of the following transactions should be removed from the list?
- A. Estimates of non-controlled disbursement account clearings
- B. Expected settlements in collection (lockbox)
- C. Future-dated wire transfers and disbursements
- D. Controlled disbursement totals
Answer: C
NEW QUESTION 430
A treasury employee of Company XYZ is privy to financial reporting information yet to be released to the public. He knows that year-end earnings exceed last year's and would be viewed as positive to the investment community. He casually mentions to a relative that now would be a good time to buy the stock of Company XYZ. Which section of the treasury code of ethics would typically be violated by such a disclosure?
- A. Conflict of interest
- B. Employee conduct
- C. External activities
- D. Confidential information
Answer: D
NEW QUESTION 431
An investor is interested in acquiring ownership in a firm while ensuring predictable timing and amount of cash flow. Which instrument should the investor choose?
- A. Common stock
- B. Preferred stock
- C. Commercial paper
- D. Bonds
Answer: B
NEW QUESTION 432
A company seeking an insured investment would avoid investing surplus cash in a:
- A. mutual fund.
- B. savings and loan.
- C. commercial bank.
- D. credit union.
Answer: A
NEW QUESTION 433
Which of the following are differences between securities issued through the primary and
private capital markets?
I.Cost of issuance and speed of execution II.Investor base III.Reasons for the offering IV.Registration requirements
- A. II and IV
- B. I, II, and IV
- C. II, III, and IV
- D. I and III
Answer: B
NEW QUESTION 434
A treasurer is monitoring the yield curve through a service provider (like Reuters) and notices that it is moving from downward sloping to upward sloping. Based on this information, the treasurer should consider:
- A. interest rate collars.
- B. a variable rate long term facility.
- C. a commercial paper program.
- D. a short-term borrowing facility.
Answer: A
NEW QUESTION 435
A cash manager invests in Treasury bills for which of the following reasons?
- A. They are extremely liquid.
- B. There is no price risk.
- C. They offer the highest yield for overnight investing.
- D. The interest earned is exempt from federal taxes.
Answer: A
NEW QUESTION 436
Exhibit:
If a company had the above activity at a bank for the previous month (a 31-day month), the bank was overcompensated by approximately:
- A. $1,605.
- B. $5,886.
- C. $3,491.
- D. $1,886.
Answer: D
NEW QUESTION 437
Company XYZ's government relations team has done a poor job in maintaining and nurturing its relationship with the local government. Because of new business ventures it is pursuing, the company needs a method that will help it monitor and collect international accounts receivables between subsidiaries. What technique is more suited given its situation?
- A. Re-invoicing
- B. Multilateral netting
- C. Internal factoring
- D. Bilateral netting
Answer: C
NEW QUESTION 438
What is a KEY reason that both a lessee and a lessor would enter into a lease financing agreement?
- A. It provides tax benefits.
- B. It eliminates maintenance of assets.
- C. It substitutes debt.
- D. It reduces technological obsolescence.
Answer: A
NEW QUESTION 439
Refer to the following information about a company at the end of its fiscal year.
The before-tax cost of long-term debt is 10% and the cost of equity is 12%. The marginal
tax rate is 35%.
What is the company's long-term debt to total capitalization ratio?
- A. 0.73
- B. 0.67
- C. 0.44
- D. 0.78
Answer: B
NEW QUESTION 440
A company receives proceeds of $1,119,274 from the sale of $1,150,000 worth of commercial paper. The paper is outstanding for 95 days. If a 360-day year is used, the company's annual interest rate is closest to which of the following?
- A. 10.27%
- B. 10.40%
- C. 10.13%
- D. 10.54%
Answer: B
NEW QUESTION 441
In order to reduce the premiums paid to insurance companies, a company should consider retaining or self insuring for:
- A. directors and officers liability losses.
- B. high severity losses.
- C. small or low severity losses.
- D. only property losses but no liability losses.
Answer: C
NEW QUESTION 442
Which of the following is NOT a consideration for treasury managers when implementing electronic communications with FSPs?
- A. Security concerns
- B. Telecommunications infrastructure
- C. Physical location of FSP
- D. Cost limitations
Answer: C
NEW QUESTION 443
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