CTP Practice Exam Questions with Answers Latest Update 2024 Assured Success, Exams of Nursing

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CTP Practice Exam Questions with

Answers Latest Update 2024 Assured

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1. For a company to be successful in selling overseas, it should do which of the following? correct answer Understand the unique banking systems and social dynamics in the countries in which it does business
2. A U.S. company has a subsidiary in Spain. Its Spanish subsidiary balance sheet has greater assets than liabilities denominated in EUR. If the EUR has depreciated against the USD, What type of exposure represents the Spanish subsidiary balance sheet and what type of translation result will it have for the
3. U.S. Company? correct answer Positive exposure and translation loss
4. What is the deciding factor in how IAS or ASC Topic guidelines require accounting for gains and losses arising from changes in a derivative's fair value? correct answer The instrument's designation

5. Which of the following statements is true of collateralized loans for inventory financing? correct answer lender's claim against inventory is recorded as a lien
6. In the trade-off theory, companies tradeoff between which of the following variables? correct answer Use of debt and the use of equity
7. Imaging services are used by some banks to enhance which of the following services? correct answer Positive Pay
8. Before spending a great deal of time on a proposed project, a company wants to find out if any of the numerous vendors in the area have the expertise to meet their needs. Which of the following would BEST fit their needs? correct answer Request for information (RFI)
9. Match the following U.S. organizations to their respective areas of oversight.
10. U.S. Organizations:

11. Public Company Accounting Oversight Board (PCAOB)
12. Financial Accounting Standards Board (FASB)
13. Governmental Accounting Standards Board (GASB)
14. Securities and Exchange Commission (SEC)
15. Areas of Oversight: a. The authoritative standard-setting body for state and local governments, public schools, state universities and other government-affiliated agencies

b. Develops US accounting standards for public, for-profit organizations c. Holds authority for enforcing US accounting principles d. Created by the Sarbanes-Oxley Act of 2002 with the goal of protecting investors correct answer: 4; II: 2; III: 1; IV: 3

16. A company can use which of the following to reduce financial exposures?
17. Options
18. Swaps
19. Futures
20. Forwards correct answer, II, III and IV

21. An organization's overnight investment rate is 3% annually. A wire transfer costs $26; an ACH costs $0.80 but takes two days longer than the wire transfer. What is the minimum amount needed to justify using the more expensive wire transfer method? (Rounded to the nearest whole dollar) correct answer$153,
22. Which of the following statement is true of banker's acceptances (BAs)? correct answerback may be sold at a discount prior to maturity
23. C ompliance with the Sarbanes-Oxley Act (SOX) means that publicly traded firms must . correct answer Indicate that they have established and are maintaining adequate internal controls for financial reporting
24. Which of the following generally occurs when a stock is listed on an organized stock exchange rather than just on automated quotation systems? correct answer Increased marketability and reduced perception of market risk

25. A credit department with a zero default rate on credit sales is usually indicative of which of the following situations? correct answer Reduced sales due to credit terms that are too strict
26. Which of the following are typical responsibilities of a treasurer?
27. Financial institution relationship management
28. Internal audit
29. Short-term borrowing
30. Liquidity management correct answer, III and IV only
31. Which of the following is a type of issuer credit rating that is made primarily on financial institutions and insurance companies? correct answer Counterparty ratings

32. Internal transfers of funds among a company's operating units to provide sufficient cash for disbursements is an example of which of the following type of operating cash flows? correct answer Internal liquidity management flows
33. Which is a disadvantage of long-term export financing through an export credit agency (ECA)? correct answer Currency exposures can occur if the currency of the loan is different from that of the cash flow of the project or subsidiary business
34. The principle that there must be an evidentiary basis, such as an invoice or receipt, for most assets and liabilities is also known as the. correct answer Measurement principle
35. Which of the following statements is TRUE of the economic value added (EVA) ratio? correct answer EVA is the after-tax operating income minus a charge for the opportunity cost of long- term debt and equity
36. Company plans to build a manufacturing plant in Mexico. Since the headquarters of the manufacturing company is based in

the U.S. it has better access to borrow at a lower interest rate in the U.S. than abroad. Considering their New Mexican plant is MXN functional, they will face FX exposure. Following their hedging policy, they use a currency swap that will allow them to borrow at a lower interest rate in USD and convert the debt to MXN at the spot rate ($19.80 MXN/USD) mitigating their FX risk. Company A borrows USD $10,000,000 at a fixed rate of 3% for 10 years with semiannual payments in the U.S. and they enter into a currency swap with Company B (a counterparty bank). The swap terms indicate that the notional principal will be exchanged at the beginning of the swap. At the inception of the swap how much will Company A pays Company B and vice versa? correct answer Company A pays $10,000,000 USD to Company B; Company B pays $198,000,000 MXN to Company A

37. Company A pays $10,000,000 USD to Company B; Company B pays $198,000,000 MXN to Company A correct answer10.88%
38. A company is considering investing $5 million in a plant and equipment. The comparison of the net present value on this investment, relative to alternative investments, would be an application of i.. correct answer Capital budgeting

39. A $100,000 Treasury bill that matures in 182 days is currently selling at 9%. What is the bond equivalent yield on this security? (Rounded to the nearest hundredth of a percent) correct answer9.57%
40. A seller of luxury boats that retail for an average of $200, offers cash discount terms of 1/10 net 30. The net present value (NPV) of these terms is -$696. Assume an annual opportunity cost of 12%. If the seller adopted 1/20 net 30 terms, what would the NPV be? (Rounded to the nearest whole dollar) Should the seller adopt these terms? correct answerNPV is -$1,340 and the seller should not adopt these terms
41. A consumer has a credit limit of $10,000 on her credit card with available credit of $1,000. She buys something for $900 online and before that charge appears on her credit card, attempts to buy something else for $500. What would occur in this situation? correct answer hold placed on her credit limit would prevent the second charge
42. Place the following methods of international trade payments in order of most protection to least protection for the seller.
43. Documentary collection

44. Letter of credit
45. Cash in advance
46. Open account correct answered, II, I, IV
47. A company has entered into a 5 year revolving credit agreement with a size of $2,000,000. The lender requires a commitment fee of 0.15% (15 basis points) on the unused portion of the line. LIBOR at the time of the loan is 0.50%. The rate on the used portion of the line is LIBOR plus 2.50%, or 3.00% (the all- in rate). Assuming that the firm uses $1,200,000 of short-term borrowings and LIBOR stays constant, what is the annual cost of maintaining the facility? (Rounded to the nearest hundredth of a percent) correct answer3.10%
48. A contractor's failure to complete a construction project is considered which of the following types of loss? correct answer Surety loss

49. A best practice for internal controls is to include which of the following in an organization's investment policy? correct answer Monthly reconciliation of investment statements and records to the general ledger
50. What is the next step in an effective disaster recovery plan after the potential contingency measures have been identified, assessed and cataloged? correct answer Prioritize corrective action
51. Which of the following topics is a focus of the Sarbanes-Oxley Act? correct answer Internal Controls
52. Why did the U.S. government intervene in the case of Fannie Mae and Freddie Mac during the Financial Crisis of 2007/2008? correct answer The government considers them important to public welfare
53. Which is an example of an over-the-counter payment stream that is automatically concentrated for a payee? correct answer Credit cards

54. What is the minimum transfer amount for sending a wire as opposed to an ACH transfer if the wire cost is $20.00, the ACH transfer is $2.00, the opportunity cost of funds is 11% and a wire speeds up transfer by one day? (Rounded to the nearest whole dollar) correct answer$59,
55. All of the following are true of zero balance accounts (ZBAs) EXCEPT. correct answer Credits and debits to be posted are netted after a one-day availability delay
56. An auto manufacturing plant in Michigan has high scheduled demand for its product. If the company does not have a long-term contract for raw materials, what type of exposure could it face? correct answer Delivery
57. Which of the following is the primary difference between a real-time gross settlement (RTGS) and an electronic-small value transfer? correct answer An RTGS results in immediate availability, while an electronic small-value transfer generally is not immediate

58. Which of the following would be considered an opportunity cost of managing the accounts payable and disbursements process? correct answer Borrowing more funds than needed to pay for disbursements
59. What is the deadline for a U.S. bank to return a check to the presenting bank after receipt of a check? correct answer Midnight on the business day following the day of receipt
60. A firm wants to gain access to higher savings and lower lending rates than banks are offering and also be able to access payment networks to affiliated clients. Which of the following would provide these benefits? correct answer Credit union
61. A company with annual revenues of $20 million COGS of $ million, Operating Expenses of $3 million, taxes of $1 million and depreciation of $1 million is seeking a new fixed rate debt facility. The interest rate on the loan has been set at 6% per year. What is the total principal the bank will lend if it is targeting a Times Interest Earned (TIE) Ratio of 5 times? (Rounded to the nearest whole dollar) correct answer$26,666,

62. In a year when taxes on dividends increased greatly, which of the following methods would be a way to reward investors with tax-deferred capital gains rather than paying a cash dividend? correct answer Stock repurchase
63. Which of the following defines a series of financial transactions designed to separate cash proceeds from their criminal or terrorist origins? correct answer Layering
64. Which of the following is an advantage for multinationals of using centralized control in treasury operations? correct answer Multinationals can operate treasury in a tax advantaged location
65. A large bank borrows funds in the short-term markets primarily in the form of commercial paper and uses the proceeds to purchase long-term assets for its investment portfolio. What would MOST LIKELY happen to this bank's assets and/or liabilities at a time when the yield curve is downward sloping, the value of long-term assets is in fluctuation and access to short-term credit is restricted? correct answer The bank's assets and liabilities would face serious valuation and liquidity problems

66. A broker/dealer organization has a highly decentralized structure and clear policies and procedures for handling its customers' investments. When it comes to the organization's own investments it should have. correct answer clearly defined and documented investment policy that emphasizes daily liquidity
67. Which describes a risk evaluation tool that was developed in the trading rooms of financial institutions to estimate the trading losses for a given period of time? correct answer Value-at-risk
68. Which of the following is a true statement regarding a bank obligation? correct answer Retail certificates of deposit (CDs) lack a secondary market
69. What method can be used to enforce segregations of duties without requiring paper-based controls? correct answer Workflow management
70. What is the primary reason that the Sarbanes-Oxley Act (SOX) was passed in the U.S.? correct answer To restore confidence in the integrity of financial reports

71. A department store typically collects monthly payments from its customers in all of the following ways EXCEPT . correct answer Net settlement systems
72. What type of arrangement exists when creditors work directly with management to establish a plan for returning the organization to a sound financial basis, such as by restructuring some of the debt? correct answer Informal bankruptcy
73. Which of the following occurs when receivables matching are used in conjunction with consolidated remittance processing (CRP)? correct answer The vendor applies the payment to the correct invoice and updates the A/R record
74. A multinational corporation sets up a relationship with a single bank to process its multiple accounts from that bank. Interest is calculated across all accounts (with negative balances offsetting positive

75. Balances from other accounts), but funds remain in their original accounts. What is this practice called? correct answer Notional pooling
76. A small company is considering making an initial public offering. Which of the following will most likely be an advantage to the company of going public? correct answer Owners can increase their personal diversification
77. Company XYZ wishes to start offering direct deposit to its employees. Which of the following methods best describes the process inviting providers to bid on the costs to provide direct deposit? correct answerRFQ
78. A company with a capital structure of 60% debt and 40% equity wants to calculate its weighted average cost of capital (WACC). The company's cost of debt is 11.0% and its cost of equity is 18.0%, while its marginal tax rate is 32.0%. What is the company's WACC? (Rounded to the nearest hundredth of a percent) correct answer11.69%
79. Which of the following is generally true of in-house versus outsourced management of a short-term investment portfolio?

correct answer Outsourced portfolios generally have better access to securities research

80. Bond A is a 10-year negotiable fixed-rate bond with annual interest payments and repayment of principal at maturity. Bond B is identical except that it has semiannual interest payments. Which of the following is true of both of these bonds?
81. Bonds A and B have the same duration
82. Bonds A and B decline in value when interest rates rise
83. An investor purchasing either bond at a discount recaptures this discount at maturity
84. An investor purchasing either bond at a premium nets a yield below the market rate correct answer and III only
85. Reverse positive pay service includes which of the following? correct answer financial institution report with check numbers of yet-to-be-paid checks

86. Which of the following statements is true of the Check Clearing for the 21st Century Act (Check 21)? correct answer One party can provide a copy or an image of the check and never provide the original document to the other party
87. Under a full-underwriting arrangement, the investment bank or syndicate owns the entire issue. What risks do they assume? correct answer Price and Marketability Risk
88. One of ABC Company's customers has historically paid via check, but the treasury team would like to transition the vendor to EFT payments. Which payment terms will the vendor likely request before agreeing to pay via EFT? correct answer float-neutral terms
89. Which of the following financial arrangements generally has the same effect on a company's capital structure as borrowing? correct answer Finance lease
90. A business wants to make Automated Clearing House (ACH) payments to a vendor, but the vendor refuses to use ACH unless the business submits each of the multiple invoices with the

overall payment. This additional remittance information totals several records of up to 80 characters each. What sort of ACH payment format must the business use? correct answer Corporate trade exchange (CTX)

91. Jimmy purchases landscaping equipment from Farm and Tractor store. Jimmy's chip card is presented for payment but the merchant equipment is not able to read the chip in Jimmy's card. Jimmy's card also has a magnetic strip which is used for payment. Jimmy signs the receipt and the merchant verifies the signature on the back of the card. In this scenario, is the Farm and Tractor store protected from a chargeback for this sale? correct answer No, because the merchant did not use the Chip to complete the transaction
92. A treasury manager needs funds at a time when interest rates are low but are expected to raise in the near future, when the current spread between fixed and variable rates is small but is expected to widen soon, and when rising interest rates are expected to lower the organization's cash flows. With a normal yield curve, which of the following would provide the LOWEST COST form of debt over the next year? correct answer Short-term fixed rates

93. A company wants to purchase a call contract on wheat with a strike price of $20 per bushel. Wheat bushels are currently selling for $25. The option is selling for $7 per bushel. How much is the speculative premium on this option? correct answer$2
94. Assuming only one project may be accepted, which of the following project profitability indexes (PI) results would a company be best off to accept? correct answer2.01
95. On the basis of the receivable balance pattern provided below, what percentage of total sales has been collected by the end of May? (Rounded to the nearest full percent) correct answer48%
96. The primary operational disadvantage of short-term financing revolves around which of the following issues? correct answer Financing renewal
97. Which of the following statements are true of international banking arrangements?
98. Overnight investment sweep accounts are necessary in most countries

99. In most countries, banks pay interest on corporate demand deposit accounts when they have surplus balances
100. Most countries require deposit balances to be held in the currency of the country of location
101. In some countries, companies may be restricted to holding only certain types of bank accounts correct answer and IV only
102. Which of the following is a direct lending relationship that cannot be cancelled without cause and allows a bank diversify their mix of loans? correct answer Bank providing funds as part of a loan syndication
103. All of the following are objectives of cash forecasting EXCEPT. correct answer Determining capital structure
104. Suppose a company with a functional currency of USD will receive 100 EUR in 30 days. If the company wants to hedge this FX risk by locking in a certain rate today, which instrument would they choose? correct answer Forward

105. Which of the following represents two topics that should covered in the typical investment valuation and impairment policies? correct answer Mark to market requirements and valuation of impaired securities
106. Which of the following statements is true of debit cards? correct answer Signature-based cards are processed like credit card transactions using network operators such as VISA, MasterCard or Discover
107. Which of the following trade payment mechanisms offers the LEAST risk for a United States company exporting to Europe? correct answer Letter of credit
108. Which of the following methods of statistical forecasting would be used to determine how one variable would directly cause a second variable to increase or decrease by some mathematical relationship? correct answer Correlation

109. What can a lockbox system improve upon over an in-house processing center for incoming payments? correct answer Proper segregation of duties
110. A company discovers that there is a substantial risk that inbound payments could be posted to the wrong account. This is an example of what type of risk? correct answer Process risk
111. Which of the following statements is an advantage of private placement of securities over the public issuance of stocks? correct answer Control over who holds the debt
112. Which function would a treasury manager ask about whether an invoice was matched to an approved purchase order? correct answer Accounts payable manager
113. Which of the following acts expanded the role of the Office of Foreign Assets Control (OFAC)? correct answers Patriot Act

114. Which of the following categories of ratios measures profitability in relation to revenue and investment? correct answer Performance ratios
115. The relationship between market interest rates and maturity is referred to as. correct answer the yield curve
116. A commodity buyer purchases a forward contract on coffee at $20 per bag, deliverable in 90 days. At the end of the 90 days, the open market price for coffee is $18 per bag. Which of the following actions should the buyer take? correct answer Fulfill the contract, even though the buyer's long position lost value
117. When a syndicate of investment bankers participates in buying and reselling a security issue under a full- underwriting arrangement, the syndicate. correct answer Pays the company for the issue and the company will receive no more funds for those securities
118. A subsidiary is not meeting the thin capital rules of a foreign country. What action should be followed from the capital