CTP Exam Dumps - Certified Treasury Professional
ABC Company is considering investing in new production technology. ABC has projected that the investment would add $5,000,000 in additional operating profit and that the resulting balance sheet would show $7,000,000 in long-term debt and $11,000,000 in total equity. ABC has a 34% tax rate and a 10% WACC. Which of the following is the investment's EVA?
A company's investment guidelines typically restrict all of the following EXCEPT:
Company ABC is experiencing an increase in bank fees due to its new international customers paying by check. Nearly 15% of all deposited items are international checks. Twenty percent of the company’s checks have 1 day of float. Sixty-five percent of the company’s checks are on-us items. The company has $300,000 of deposits each day. The company’s deposits consist of both cash and checks, split evenly. On a typical day, how much of the deposit will be available immediately?
Contingency plans often focus on the business supply chain, ensuring that customer service is maintained. The financial supply chain, which is equally critical to the plan, should address:
The Treasurer for XYZ Manufacturing, Inc. recently exchanged a portion of its euro holdings into U.S. dollars to purchase gas futures contracts. This was done in anticipation of an assumed rise in gas prices due to the continued weakening of the U.S. dollar. Which of the following types of risk is being mitigated?
Assuming a marginal tax rate of 36%, the taxable equivalent yield for an investment with a tax-exempt yield of 3% would bE.
Company XYZ is aggressively expanding globally. It is evaluating four markets: Latin America, Europe, Asia and Middle East.
Latin AmericA. Risk adjusted discount ratE. 15%, Payback period=7 years, IRR=15%
EuropE. Risk adjusted discount ratE. 8%, NPV=$20M
Middle East: Risk adjusted discount ratE. 11%, IRR=12%, NPV=$5M
AsiA. WACC. 9%, Payback=2 yrs, IRR=8%
Based on the information, which two markets will company XYZ MOST LIKELY pursue?
A company may choose to use a derivative to reduce risk on which of the following types of exposure?
I. Currency
II. Interest rate
III. Commodity price
A company converts the expense processing for its sales team from reimbursement by check to providing the team with travel and entertainment cards. Immediately, the company’s expenses for the sales force increase by 10%, with no concurrent increase in sales volumes. What aspect should the company have covered in their policies for card use to prevent the increased expenses?
A company has multiple wholly-owned subsidiaries that issue their own checks which are signed by head office staff. The company decides to move to electronic payments using their bank’s internet-based payment systems to reduce costs. Payments are now initiated by the subsidiaries. What element of the payment policy should be considered if the company still wants to maintain head office control over payments?
A company offers credit terms of net 40, with an opportunity cost of 12% to a customer. What discount would have to be offered for the customer to be indifferent between paying on Day 40 and paying with the discount on Day 10?
All of the following would encourage a company operating nationwide to develop multiple banking relationships EXCEPT:
Check MICR line information includes which of the following?
I. Bank of deposit identification number
II. Payee bank identification number
III. Federal Reserve bank code
IV. Payor's account number
A bank employee programs an internal payment system to transfer half a cent of each transaction to her personal bank account. What type of risk does this behavior illustrate?
An accounts receivable manager has been asked to accelerate cash into her company by offering trade discount terms to its customers. Her company's cost of capital is 11%. If she offers terms of 2/10, net 30 on a $50,000 invoice, what is the present value to the company if the customer accepts the discount and pays early?
Which cost benefit analysis technique uses the methodology to find where the present value of each project’s cash inflows equals the present value of each project’s outflows?
A large U.S. company is planning to fund its Canadian subsidiary. Currently, the Canadian dollar is trading at CAD 1.25 per U.S. dollar, and the U.S. dollar is expected to depreciate in the near term. To manage this FX exposure, what technique should the company implement?
For a retirement plan to be qualified under ERISA, employer and employee contributions must be:
Disbursement float includes which of the following three float time intervals?
The discount rate for a T-bill with a face value of $200,000, 182 days to maturity, and a selling price of $194,375 would be:
An airline wants to lock in the price of the jet fuel it needs to purchase to satisfy the peak in-season demand for travel. The airline wants to manage its exposure to fluctuations in fuel prices. What type of exposure is this?
Which of the following must be considered when designing the basic framework for a cash management system?
All of the following staff would be involved in the evaluation of an outsourced accounts payable solution EXCEPT:
An evaluated receipts settlement would be MOST commonly used in an environment where:
A U.S. based multinational company is filing its U.S. tax return and notes that its U.K. subsidiary had pre-tax income equal to $1 million. The U.K. subsidiary paid an effective tax rate on this income of 40%. If the U.S. tax rate is 34%, what will be the amount of the foreign tax credit on the U.S. tax return related to the U.K. income?
As an internal control tool, what does the matching of an invoice to the original purchase confirm?
MICR encoding errors may be detected by all of the following TMS modules EXCEPT:
The MOST important tool the Federal Reserve Board has for influencing the amount of reserves in the banking system is:
What type of tax does a multinational auto manufacturer commonly pay in foreign countries at each stage of a vehicle’s production?
Which of the following is NOT a method multinational companies (MNC) use to repatriate capital?
A company is looking for a way to finance their inventory. What is the BEST funding match?
Which function involves evaluating alternative projects in relation to one another and in relation to the company's cost structure?
What is the MOST appropriate financial plan when a corporation wishes to establish its overall goals and objectives over a period of time?
A short-term bank line with $20 million of unused capacity and an investment in an overnight money market fund are both forms of which liquidity requirement?
To acquire an asset without putting debt on the balance sheet, a company should consider which of the following arrangements?
In a large company, the financial planning function typically falls directly under the responsibility of the:
A multinational corporation has a successful subsidiary in a country that taxes cross-border dividend payments at 72%. Collections on accounts receivable average 90% per month, and the average rate on local government bond investments is 2.5%. What would be the BEST method for the company to repatriate local profits?
Improvements to the cash flow timeline from a selling company’s perspective would include:
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?
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?
Company X has asked its banking partner for a recommendation on which type of bank account would be best if it has excess funds that are not required for daily cash management. The company determined the excess cash flows by using the short-term cash forecasting distribution method. Company X will require a return on these funds. Which account is recommended?
A publicly held U.S. company has reported at the beginning of the year that it expects to increase shareholder value by 5%. The current expectations are for interest rates to remain steady with a decline in fourth quarter. Treasury policy requires that investments be 90 days or less and investment grade. How should the company invest excess cash to support this goal?
XYZ Company is a fairly new and high growth company funded by venture capital. Which of the following performance measures is it MOST LIKELY to use?
USA Tires, LLC is a U.S. company that manufactures a high performance tire. It has $500 million in annual domestic sales. Customer A is located 50 miles from the USA Tires warehouse. Customer A orders 1,000 high performance tires per month at a price of $50 per tire. It has credit terms of 30 days. Customer B is located 40 miles from the USA Tires warehouse. Customer B orders 1,000 high performance tires per month at a price of $60 per tire. Customer B has credit terms of 20 days. Which legislation is being violated in the scenario?
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?
Company A has decided to purchase $3,000,000 of real estate from Company B. Company A will make the payment in 3 parts. The electronic payments will be sent from Bank A to Bank B. On Day 1 Company A will send a $400,000 check as a deposit, which is deductible from the balance. The check is expected to clear in 4 days. On Day 2, two payments are initiated, one wire transfer for $2,000,000 and an ACH for $600,000 to complete the balance. On Day 2 what percentage of the payment to Company B is NOT final?
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?
RAL Capital, a lean global financial service provider with revenues of $8 billion, has 10 regional offices located around the world. The RAL global trading groups are structured as profit centers with each center having its own profitability targets. The group’s clients consist of large multinational corporations and financial institutions that require the buying and selling of large amounts of currency. The Treasurer is considering reorganizing his department into a profit center. The group processes millions of transactions every year. What is a downside of this scenario?
A U.S. corporation has annual revenues of $500 million and a corporate tax rate of 15%. It has subsidiaries in Country A and Country B. Subsidiary A has annual revenues of $50 million. Subsidiary B has annual revenues of $20 million. The parent company has asked the Subsidiary A to transfer the equivalent of $10 million to Subsidiary B. There is a 5% withholding tax in Country A and a 3% withholding tax in Country B. How much withholding tax will the company owe as a result of this transaction?
Which of the following contributes MOST to the marketability of a security?
Under which of the following circumstances is lengthening the disbursement mail float NOT a benefit to the disbursing company?
Which of the following are primary objectives of cash forecasting?
I. Managing liquidity
II. Optimizing float
III. Enhancing financial control
IV. Minimizing borrowing costs
Bank A is to pay Bank B $6,000,000 for 10 transactions that occurred throughout the day. Bank B is to pay Bank C $8,000,000 for 13 transactions that occurred throughout the day. Bank B is to pay Bank A $5,000,000 for 17 transactions that occurred throughout the same day. These banks operate using a gross settlement system. How many transactions will occur between these banks to settle the payments?
A grocery store chain would be likely to use all of the following services EXCEPT:
In analyzing the costs for services among several banks, a cash manager should compare all of the following EXCEPT the:
Merchant MNO’s sales for the day total $20,000. Fifty percent are credit cards, split between Card Red and Card Blue respectively, at 65% and 35% of the card volume. The average ticket is $50. Fees paid are 2% for Card Red and 2.5% for Card Blue and a fee of $0.05 per transaction. What are the fees that MNO will pay to the issuing banks?
A company can use all of the following documents to establish a relationship with a bank EXCEPT:
Which of the following is an example of a company's internal data used for cash management?
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
The company's monthly credit sales are in Table 1 and its receivables collection pattern is in Table 2. If this company wishes to achieve a second quarter (April-June) DSO of 60 days, what would its ending accounts receivable balance need to be?
Assume a 90-day quarter.
True statements about the open account method of trade payment include which of the following?
I. A bank guarantees payment.
II. It is the most common type of trade credit.
III. A periodic credit review of each customer is required.
IV. The customer makes equal monthly payments.
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?
XYZ Corporation is presently a short-term borrower and uses a revolving line of credit with an interest rate of 7%. The Treasurer would like to reduce interest expense and increase liquidity without renegotiating the line of credit. Which of the following projects should the Treasurer support in order to achieve this objective as quickly as possible?
When establishing a retail collection system that accepts consumer debit cards, a company must comply with which Federal Reserve regulation?
A U.S. company that is expecting to receive a payment of C$1,000,000 purchased a put option of C$1,000,000 at a strike price of 1.75 C$/US$. Two days before the receipt of the payment, the spot rate is 1.85 C$/US$. To maximize its receipt of dollars, the company should do which of the following?
A nationwide discount retailer is re-evaluating financing methods since the most-popular and most-expensive electronics “must-have†item for this year is set to ship from factories in China. Which of the following credit facilities would be MOST effective for the retailer to use?
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?
Simplifying upgrades and system restoration, access from multiple remote locations, and interfacing with multiple applications are all reasons to:
All of the following statements are true about loan participations EXCEPT:
Sign Company and Paint Company have a twenty-year business relationship, and they work together when sending and receiving payments. Sign Company also does a large amount of business with Brush Company, a subsidiary of Paint Company. Brush Company’s Treasurer recently received a memo from the Treasurer of Paint Company reminding it that when dealing with vendors, extensive information is required when receiving or making ACH payments. What ACH payment format are Sign Company and Paint Company MOST LIKELY to use?
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?
Company XYZ had the following sales over the last 5 years:
The company raised funds to invest in its operations. Considering the company’s growth, it is interested in future options that will allow it to maintain its debt level and keep debt costs low. The company is not concerned about changes to the working capital structure. Which security did the company issue?
One example of increased use of electronic payments for retail businesses to convert customer checks to cash at the counter more quickly is:
A company which experiences increased business volumes but a minimal increase in profitability MOST LIKELY has:
XYZ Inc. has limited cash flow, total liabilities to total assets greater than 52%, and a high WACC. To help meet the goal of lowering their WACC, the company plans to issue several million dollars of private equity to the chairman of the board. If the company proceeds with this plan, the company may:
BEA Company has determined its breakeven dollar amount for concentrating remote funds is $550.00. BEA Company has a daily earnings rate of 6% and gains one day of accelerated funds. If a wire costs BEA $35.00 dollars, what is the cost of an electronic funds transfer for BEA Company?
A company is evaluating its employee healthcare expense and payroll applications. If the company wishes to provide maximum convenience to its employees, which payment method is the BEST choice?
A retail brokerage firm is MOST like which one of the following types of financial institutions?
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.
Which of the following types of risk would an investor who does NOT receive payments on a security under the original terms be subject to?
All of the following are examples of treasury management system transactions for liquidity management EXCEPT:
The interest costs on commercial paper are determined by all of the following EXCEPT the:
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 publicly-traded U.S. company has a German subsidiary which has accumulated significant cash balances. The company needs to pay its quarterly dividend but lacks the funds to make the payment. What is its BEST alternative for obtaining the funds?
Investors typically require a higher yield as compensation for holding securities that have:
The company's monthly credit sales are in Table 1.
The company's receivables collection pattern is in Table 2. If this company's accounts receivable on March 31 is $0, what would the accounts receivable balance be at the end of July? Assume a 90-day quarter.
A financially sound company sends wires to investors in the morning but does not receive replacement funds until the afternoon. Which facility will the company MOST LIKELY arrange with its bank to facilitate the company’s wire payment activities on any given day?
A multinational corporation (MNC) moving all of its Mexican peso-denominated revenues into a lower tax-rate jurisdiction could adopt any of the following treasury practices EXCEPT:
The risk that one financial institution’s failure could lead to the failure of other financial institutions is known as:
A company in a distressed financial condition may choose to use which of the following services to entice suppliers to continue to sell to it on open terms?
A UK based manufacturer has a subsidiary in Belgium and a manufacturing plant in Italy. The subsidiary wants to sell its products in Sweden. How would the UK parent best structure the movement of funds within the organization to optimize management of working capital while ensuring recourse?
The Fed can reduce the money supply by doing which of the following?
1. Increasing reserve requirements
2. Purchasing government securities
3. Increasing legal lending limits
4. Selling government securities
Which of the following is the MOST accurate statement regarding the passage of the Sarbanes-Oxley Act?
A review of a company's risk management strategy would include all of the following EXCEPT:
XYZ Company's cash manager is evaluating cash concentration transfer options. The company has an 8% cost of funds and $50,000 in average daily field cash receipts. The wire transfer results in the transfer of funds one day faster. Which of the following options correctly ranks the transfer choices from most cost-effective to least cost-effective?
1. Electronic depository transfer costing $1.00
2. Electronic depository transfer costing $2.50
3. Wire transfer costing $8.00
4. Wire transfer costing $15.00
A company invests in a bond and then later agrees to sell the bond to a bank with the understanding that the company will buy the bond back at a later time. This is known as:
Under a loan agreement, which of the following could be an event of default?
I. Nonpayment of interest when due
II. A material adverse change in the condition of the borrower
III. A debt-to-equity ratio above the limit specified
IV. Shortening the cure period by half
All of the following factors influence a company's decision to use electronic commerce EXCEPT:
Which of the following are treasury management objectives?
I. To meet obligations in a timely manner
II. To minimize holdings in non-earning cash balances
III. To monitor and assist in the control of financial risk
IV. To evaluate costs and benefits of capital projects
A company’s capital structure includes $800,000,000 in total capital, of which $200,000,000 comes from debt. The firm’s after-tax cost of debt is 6%, and its cost of equity is 12%. The marginal tax rate is currently 40%. What is the company’s weighted average cost of capital?
Which of the following would be MOST suitable for a risk-averse electronics manufacturer that uses copper in many of its components?
The Sarbanes-Oxley Act of 2002 requires that a public company’s financial statements be certified by the company’s:
The primary bank for a major multinational company would use an overlay structure for euro zone cash concentration under which of the following circumstances?
In predicting collections from credit sales, a cash manager can obtain prior period information from which of the following sources?
I. Customer payment histories
II. The company's concentration bank
III. The accounts receivable department
IV. The accounts payable department
Which of the following would increase if the Fed were to announce a reduction in reserve requirements?
In which of the following international cash management methods is title for goods transferred for intercompany sales?
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?
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?
Which of the following is NOT a drawback to using ROI as a performance measure?
Which of the following trade payment methods virtually eliminates the seller's credit risk?
One of the advantages of raising capital through public offerings is that:
A telecommunications company receives a profit of $587,542 from its cellular phone production unit in the year after investing $962,870 in a new product line. What is the first year return on its original investment?
An instrument that gives the right to buy a stated number of shares of common stock at a specified price is known as:
XYZ Company is considering selling treasury stock but is concerned about the amount of capital it will raise given the current high volatility of the stock market. What is the BEST strategy a firm can employ to reduce its uncertainty?
Regarding dividends, on which of the following dates would a company's current assets be reduced?
On which exchange is a company’s stock traded on the over-the-counter market?