CTP Online Practice Questions and Answers

A public company's risk profile is currently in balance. The management's mission statement is to minimize stock devaluation. However, it is forecasting a need for working capital in the short term. Which of the

following solutions would BEST assist management in accomplishing its mission?

A. Redeem outstanding shares

B. Issue additional shares

C. Use debt financing

D. Pay out dividends

On which exchange is a company's stock traded on the over-the-counter market?

A. AMEX

B. FINRA

C. NASDAQ

D. NYSE

Company X has a rating that is below investment grade. The treasurer would prefer to use commercial paper for its short-term financing needs and has a commitment from its bank to provide a standby letter of credit. What costs would be associated with this process?

A. Rating agency charges, credit enhancement costs, and dealer fees

B. Discount, broker fees, and commitment fees

C. Dealer fees, compensating balances, and participation fees

D. Commissions, rating agency charges, and broker fees

A small for-profit, start-up company is designing a retirement plan with the goal of minimizing costs and operating income volatility while providing a qualified retirement savings vehicle. Which of the following would be the BEST choice?

A. Defined benefit plan

B. Internal Revenue Code 401(k) plan

C. Hybrid plan

D. Internal Revenue Code 403 (b) plan

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?

A. Unsecured bond

B. Bond with an equity kicker

C. Zero-coupon bond

D. Convertible security

Which institution or accord was approved in 2009 to strengthen the regulatory capital framework for banks by focusing on minimum capital requirements, supervisory review and market discipline?

A. FINRA

B. Basel I

C. Basel II

D. CAMELS

A properly designed concentration system will potentially achieve which of the following results?

I. Increased authority to field offices

II. Increased investment income

III. Improved ability to take discounts

IV.

Reduced dependence on third-party concentration vendors

A.

IV only

B.

I and II only

C.

II and III only

D.

II, III, and IV only

Which of the following investment instruments is a discount instrument?

A. Banker's acceptance

B. Yankee CD

C. Treasury note

D. Municipal bond

A company may choose to outsource some of its cash management processes to:

A. better protect its assets.

B. increase netting and pooling opportunities.

C. reduce external fraud.

D. more easily monitor its banks' creditworthiness.

Since the inception of ABC Company's pension plan, 1,500 employees qualified and were paid pensions of $500 million after retirement, of which 700 employees were those who earned $110,000 or more and received $200 million in pension benefits. When the company filed for bankruptcy in 2010, the IRS claimed back taxes from the company stating that the pension plan was not qualified under ERISA. On what basis was the IRS MOST LIKELY making its claim?

A. Adequate funds were not available to meet the plan's obligations.

B. Pension benefits were not safeguarded when the pension plan was terminated.

C. The company failed to remit its PBGC premiums.

D. The plan did not meet the minimum coverage requirements.

A company pays its vendors with the following methods:

2,600 checks, averaging $1,000 each, issued on the 15th of the month 1,000 ACH payments, averaging $2,000 each, on Wednesdays 500 ACH payments, averaging $500 each, on the first Monday of the month 10 wires on the last day of the month for approximately $260,000 each

If the company has a daylight overdraft agreement, which of the above presents the highest single-day credit risk for the bank if the company enters bankruptcy?

A. The wires

B. The ACH payments issued on Wednesdays

C. The checks

D. The ACH payments issued on the first Monday of the month

Which of the following payment instruments can provide predictable collection float? I.Wire transfer II.Check III.ACH IV.Cash

A. III only

B. IV only

C. I, II, and IV only

D. I, III, and IV only

Fluctuations in interest rates and the availability of funds are more significant risks for companies that rely on:

A. short-term borrowing for long-term uses.

B. short-term borrowing for short-term uses.

C. long-term borrowing for long-term uses.

D. long-term borrowing for short-term uses.

A company recently implemented a treasury code of conduct, which defined appropriate actions and business behaviors. The company developed policies and procedures that assigned duties to managers, and distributed the code to all treasury employees. The treasury group could have improved upon this implementation by doing which one of the following?

A. Having the code of conduct reviewed by the marketing department

B. Providing training on the code to all employees

C. Having the code certified under Sarbanes-Oxley Act requirements

D. Incorporating the code under its disaster recovery plan

An international organization has decided to move its treasury operations to the head office in Paris, France. The company's goal is to establish the treasury as the primary provider of banking services and all company financing. What would the new proposal be an example of?

A. A hybrid treasury structure

B. A decentralized and a re-engineered organization

C. An in-house bank and a centralized organization

D. An outsourced shared service center