301-400

A NO.308 Which of the following capital budgeting methods ignores the time value of money? A. Payback period B. Profitability Index C. Net Present Value D. Internal Rate of Return

A

A NO.329 West Coast Retail Shop has experienced reduced cash availability in its bank account since a new store manager was hired. The manager is responsible for manually preparing daily bank deposits, which generally include a large number of checks, for processing at a bank branch in the same shopping mall as the store. Which of the following should West Coast Retail Shop implement to improve the available balance in its bank account? A. A Point-of-Purchase check conversion process B. An Image Replacement Document conversion process C. Transit check clearing D. A direct exchange with local banks

A

A NO.345 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? A. 33.3% B. 66.7% C. 86.7% D. 100%

A

A NO.355 The historic rate of return in the U.S. stock market is 8%. An investment portfolio has a mix of equity investments consisting of 40% A-Corp stock, 30% K-Corp stock, 10% M-Corp stock and 20% WCorp stock. The investment portfolio manager tends to buy and hold the equity investment position for 3 years on average. To calculate the required rate of return for this investment portfolio, what rate from the table would be used as the risk-free rate? A. 0.10% B. 0.75% C. 3.30% D. 4.50%

A

A NO.362 Based on the following information, how much money will XYZ Company owe the bank for monthly service charges after the earnings credit is applied? Average Ledger Balance$500,000 Deposit Float$10,000 Reserve Requirement10% Earnings Credit Rate5% Monthly Service Charges$5,000 Days in month30 A. $0 B. $68.49 C. $436.99 D. $561.64

A

A NO.383 A cash manager is determining the threshold over which cash concentrations will be done by wire. An ACH transaction costs $0.50. A wire costs $12.00. Funds are available 2 days quicker by wire and the opportunity cost of funds is 5%. What threshold should the cash manager use? A. $41,975 B. $43,800 C. $83,942 D. $87,600

A

A NO.391 XYZ Company is a U.S. based company that has just issued some euro-denominated bonds in London. The bonds have a duration of 10 years at a rate of 3.5% with a par value of EUR 50 million. An FX swap contract was created on the date of the issuance in EUR/USD, with a spot rate of 1.2908 and a forward rate of 1.1102. This bond is subject to what type of risk? A. Interest rate B. Currency C. Floating rate D. Duration

A

B NO.307 XYZ Company is interested in issuing a bond to finance a new venture opportunity. The new venture is not expected to generate any cash flow for several years. Because of this, XYZ Company would prefer to issue a bond that does not require interest payments. What type of bond should XYZ Company issue? A. Zero-coupon bond B. Municipal bond C. Tender option bond D. High-yield bond

A

B NO.310 The Treasurer of PJB Company is in charge of implementing new treasury management software. Without issuing any RFPs, the Treasurer hires a consulting company to install the software and program it to suit the company's needs. The Treasurer is responsible for approving the consultant's invoices for payment. Through conversation, the CFO discovered that the Treasurer's relative is one of the partners at the consulting company. The Treasurer was immediately terminated. What did the Treasurer MOST LIKELY violate? A. The corporate code of conduct B. Sarbanes-Oxley controls C. The Uniform Commercial Code D. Treasury operations procedures

A

B NO.316 A newly hired Treasurer must establish the organizational structure of the treasury department for ABC Corporation which is a publicly traded multinational organization with sales offices in over 50 countries. There are limited opportunities for trading and hedging activity. The first challenge is to identify the most appropriate structure for the treasury group that will provide control, visibility, economies of scale, and lower operating expenses. What structure should be chosen? A. Centralized Cost Center B. Outsourced Cost Center C. Regionalized Profit Center D. Decentralized Profit Center

A

B NO.319 Over the past 3 years XYZ Company has expanded into multiple countries and significantly grown its banking relationships. The company now incurs significant expenses related to payment transaction costs and maintaining multiple bank connections. What should the company use to combat these rising costs? A. SWIFT network B. ACH network C. CHIPS network D. Treasury workstation

A

B NO.324 ABL Corporation is currently receiving a return of 10% on its investments. The bank is offering them an ECR of 15%. In order to get more value for their money ABL Corp. has decided to take advantage of the higher ECR and use funds from its Money Market Accounts to cover bank service charges. If ABL already has an average ledger balance of $750,000, how much more do they need to deposit on their account to cover all $10,000 of monthly service charges? A. $136,111.11 B. $736,111.11 C. $811,111.11 D. $886,111.11

A

B NO.326 PTC Corporation has determined that the threshold amount for initiating a wire transfer vs. an ACH payment for concentrating funds is $60,225. Wires cost $9.00 and save one day of float. If the opportunity cost is 5%, what is the cost of the ACH payment? A. $0.75 B. $0.80 C. $0.90 D. $1.00

A

B NO.349 A town has $25 million excess funds to invest long term. The town's investment policy requires it have full FDIC coverage on all investments. The town is willing to do its own due diligence on the financial institutions that they invest in, but would prefer to have one statement. Which of the following investment options meets its requirements? A. Certificate of Deposit Account Registry Service B. Separately managed diversified portfolio C. Institutional Money Market Account D. Jumbo Certificates of Deposit

A

B NO.379 A customer buys a laptop for $850 and a CD for $13. Only items with sale price of $15 and greater are subject to value added tax (VAT). Assuming VAT of 8.5%, how much tax does the customer incur at the point of sale? A. $72.25 B. $73.36 C. $722.25 D. $922.25

A

B NO.382 An analyst at Davis Company uses the tax payment (TXP) banking convention for payment of state taxes. The analyst is preparing to pay $650,000 in taxes to the state where Davis Company is domiciled. What payment method will the analyst use to make the tax payment? A. ACH Credit B. Fedwire Credit C. Certified Check D. Multiple Drawee Check

A

C NO.303 A cash manager at a U.S. retailer forecasts a positive collected cash position for the end of the current day. The company has an overdraft facility at 10%, a separate investment account earning 8% before taxes, an earnings credit rate of 8% and an outstanding single payment note at9.5% maturing in 1 week. This month's bank service fees are expected to exceed the earnings credit. Which of the following options would be the MOST economically positive for the company? A. Leave the funds in the account. B. Redeem the single payment note. C. Prepay administrative expenses. D. Transfer funds to the investment account.

A

C NO.328 MCA, Inc. upgraded the Treasury workstation that had been in place for two years and used data from that 24-month period to develop a new short-term forecast. A trend factor was applied to controlled disbursements of 97% on a month-by-month basis and the variance to actual disbursements is less than 1%. Which of the following model validation techniques was utilized? A. In-sample validation B. Documentation validation C. Ongoing validation D. Comparison validation

A

C NO.332 The Treasurer at Worldwide Industries is concerned that its retail lockbox provider, Bank A, is not PCI DSS-compliant. Bank A processes 500,000 checks per month for Worldwide Industries. Worldwide Industries uses a third-party provider, Pay Point, for their credit card payments and funds are wired daily to Worldwide's depository account at Bank A. What should the Treasurer do? A. Take no action as Bank A would not be required to be PCI DSS-compliant. B. Issue an RFP and search for a lockbox provider that is PCI DSS-compliant. C. Stop accepting credit card payments since Bank A is not PCI DSS-compliant. D. Notify all customers that pay by credit card that Bank A is not PCI DSS-compliant.

A

C NO.341 Company GRA has retail locations in remote areas of Montana. All banking options within the area, deemed a safe distance for making cash deposits, fail the counterparty risk assessment. Deposits would include both cash and checks. In order to achieve immediate availability of funds, what deposit method should be utilized? A. Virtual vault services B. Field deposit systems C. Remote deposit capture D. Deposit concentration services

A

C NO.344 A consumer is presented with payment options from a merchant when making a purchase. The consumer does not wish to share any information that could be later used in identity theft or fraud, while the merchant requires guaranteed payments within 24 hours with no NSFs or declined payments. Which of the following options would suit both the consumer and the merchant? A. NACHA's Secure Vault PaymentsTM B. Credit card payment C. Direct debit D. E-check

A

C NO.354 A hamburger patty supplier receives an order from ABC Burgers located in Minnesota. The supplier's policy is to bill upon fulfillment of the order and not at delivery. ABC Burgers pays upon receipt of goods. A blizzard has closed the manufacturing facility and roads; delivery will be delayed by two days. Which type of float occurs between the receipt of an invoice by ABC Burgers, including the credit period, and the time ABC Burgers' account is debited? A. Payment B. Invoicing C. Collection D. Disbursement

A

C NO.370 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? A. Commercial paper B. High-yield bonds C. 16-week U.S. Treasury bill D. BB rated bond

A

C NO.396 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? A. Wire fraud B. Payroll fraud C. ACH kiting fraud D. Credit card fraud

A

D NO.359 XYZ Corporation uses ABC Bank for their lending and treasury management. In addition, the bank serves as bond trustee for XYZ Corp. If XYZ Corp. becomes distressed, this relationship could create a conflict of interest for the financial institution. What barrier prevents a financial institution from sharing confidential information between divisions? A. Chinese wall B. Counterparty risk C. Non-disclosure agreement D. Sarbanes-Oxley controls

A

D NO.361 An equity management company's Chief Financial Officer and Treasurer are evaluating their corporate investments and decide that they need to diversify their stock holdings to include personal care products companies. Based on their analysis, publicly-traded companies A and B stand out as choices. Company A has a beta value of 0.65 while company B has a beta value of 1.10. They decide to invest in Company A. What objective of their investment policy did they use to make their decision? A. Safety B. Liquidity C. Exposure horizon D. Risk/return trade-off

A

D NO.364 Which of the following is a KEY objective when instituting a collection and concentration policy? A. Cost efficiency B. Performance measurement C. Regulatory and legal considerations D. Establishing approved collection practices

A

D NO.390 The Treasury Manager is forecasting sales based on historical data. It was observed that sales decreased sharply in December last year, normally a high sales volume period. Further investigation indicated that a severe winter storm was experienced across the Southeastern United States. How should this event be classified in the forecast when considering the sales trends? A. Random movement B. Stationary series C. Cyclical pattern D. Seasonal pattern

A

D NO.398 XYZ Company is a publicly held manufacturing company that has decided to branch out into the international market. Five million dollars is needed to set up management and hire the factory workers, $2 million for various government certifications in order to begin business in Poland, and $1 million for miscellaneous expenses. While looking for funding, XYZ found that local banks in Poland were not willing to provide financing without which of the following? A. A Full Guarantee B. A Comfort Letter C. A Personal Guarantee from the CEO D. A Certified Workers Compensation Policy

A

A NO.304 A portfolio manager purchases a floating rate mortgage backed security that would currently provide a 4% yield to the company. Since mortgage rates have been fluctuating significantly over the past month, the manager is thinking about entering into an interest rate swap to hedge against the rate movements. Although the manager would remove most of the price sensitivity of the asset by executing the swap, it would also lower the total yield on the investment due to swapcosts. What objective in the company investment policy is guiding the portfolio manager's decision? A. Risk analysis B. Risk/return trade off C. Preservation of principal D. Performance measurement

B

A NO.309 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? A. Glass-Steagall Act (1933) B. Robinson-Patman Act (1936) C. Fair Credit Billing Act (1975) D. Fair Debt Collection Practices Act (1978)

B

A NO.325 Which of the following is a component of a company's operating budget? A. Shareholders equity B. Accounts receivable C. Long-term debt D. Capital investments

B

A NO.330 QRT Corporation uses exponential smoothing in its cash flow forecasting model. Five days are used to calculate the moving average forecast. If the value of the smoothing constant is .60, what is the exponential smoothing forecast for day 7? A. $2,000,000 B. $2,052,000 C. $2,060,000 D. $2,400,000

B

A NO.342 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. Access control B. Approved uses C. Vulnerability management D. Definition of responsibilities

B

A NO.350 A U.S. company decides to enter a new geographic market facing some dominant competitors, but projects sales growth of 40% in its first year due to its superior product line. The company decides to only offer electronic payment methods for settlement of its receivables. A year later, the company's sales volume only increases by 10%, but their average days' sales outstanding of 32 days is the best in the industry. What should the company have considered in its collection policy objectives? A. Cost efficiency B. Customer satisfaction C. Performance measurement D. Approved collection practices

B

A NO.365 XYZ Corporation's current ledger balance of the controlled disbursement account is $1,286,500. Based on the information in the table, what will the corporation's available balance be at the end of today? A. $(251,527) B. $126,744 C. $434,706 D. $1,748,473

B

B NO.315 The Treasurer at ABC Company currently uses an in-house company-processing lockbox center. The Treasurer has asked for an analysis to determine the major advantage of using a traditional check/mail-based lockbox system. ABC receives 287,000 payments per month and hired seven additional staff members to process the payments in-house. Additionally, $389,000 was invested in the equipment used to process the payments and NSF checks have decreased 7% since using the in-house center. The equipment's current market value is equal to its book value. What major advantage should the analysis indicate? A. Net income will improve. B. Availability float will be reduced. C. The equipment can be sold at no loss. D. NSF checks will continue to decrease.

B

B NO.323 ABC Company offers a discount of 2/10, net 30 to its customers. ABC factored its accounts receivables with an outside vendor, under a "with recourse" arrangement. What impact might this have on the company? A. Increase days sales outstanding. B. Improve cash conversion cycle. C. Reduce bad debt expense. D. More customers may take the discount.

B

C NO.314 A U.S. financial institution expects to grow at an exponential rate to become one of the largest companies in the country. It wants to hire the best talent in the industry and is willing to pay excessive compensation. In order to achieve the high growth, it is planning on charging hidden fees on mortgages, credit cards etc. Further, it wants to engage in risky practices pertaining to over-thecounter derivatives, asset-backed securities and hedge funds. The financial institution has hired an outside law firm to determine if it is feasible to escape unwanted regulation and oversight from various government entities. Which of the following regulations prohibits the financial institution from engaging in the described practices? A. Gramm-Leach-Bliley Act B. The Dodd-Frank Act C. Sarbanes-Oxley Act D. USA Patriot Act

B

C NO.318 PFA Corporation has used regression analysis based on historical data to determine the estimated portion of dollars of checks issued that will clear on any given business day. If PFA issued $150,000 in checks and $7,500 worth of checks cleared on day 5, what value of checks will be estimated to clear on day 4? A. $7,500 B. $15,000 C. $22,500 D. $30,000

B

C NO.348 A North American service company has autonomous offices in different geographic regions each handling their own sales and accounts receivables deposits to local banks which primarily consist of checks. By implementing a lockbox collection system, what objective in its collection policy would it have met? A. Payment float B. Cost efficiency C. Segregation of duties D. Customer satisfaction

B

C NO.393 An intern was hired by the Vice President of Accounts Payables to process the electronic payments that come through the bank. The intern is responsible for manually entering payee information into the system at each step of the process. The VP directed the intern to enter the information as fast as possible without mistakes to optimize the number of transactions that could be processed. Instead of manually entering information the VP should have utilized: A. large value transfer system. B. straight-through processing. C. continuous linked settlement. D. enterprise resource planning system.

B

C NO.400 Customers of an electronic trading firm are experiencing problems with the online trading platform. The company IT department discovered that although display of market data is in the proper place, there are no tags being used to populate specific information in the necessary fields. The company is MOST LIKELY experiencing a problem with: A. Electronic Data Interchange (EDI). B. Extensible Markup Language (XML). C. Hypertext Markup Language (HTML). D. Public Key Infrastructure (PKI).

B

D NO.306 A company's Chief Financial Officer assigns a team reporting to the Treasurer to restructure the company's complex debt instruments and equipment leasing arrangements. The team executes the required settlement transactions using wire payments to facilitate the new debt structure, and in the process violates the lending requirements of the company's bank. What should the Treasurer have done to prevent the violation? A. Set up an exception management process. B. Established covenant monitoring and compliance controls. C. Restricted access to the company's payment processing system. D. Segregated the team's duties for the debt structuring and transaction activities.

B

D NO.312 Racklyn Paint Company, a new paint and construction company, has vendor payables of $2 million due periodically over the next 3 months; payroll payable to its crews of $500K each month; a mortgage of $4.4 million with a fixed rate of 6.0%; and an equipment loan of $5 million with a bank at a 30-day LIBOR plus 150 bp payment of $100K due monthly. Racklyn receives their first contract valued at $12 million with half of the contract value due at the time of contract and final payment upon completion. Racklyn expects the job to last 6 months. Which option would be the BEST use of Racklyn Paint Company's cash? A. Prepay a portion of the equipment loan to minimize interest rate risk. B. Pay current payables and invest any excess cash in a money market account earning 1.5%. C. Pay off the mortgage and invest remaining funds in a 6-month CD at 2.5%. D. Invest $4 million in a CD at 2.5% for 3 months.

B

D NO.322 Company XYZ offers a retirement plan wherein the value of the plan's assets and liabilities is measured separately. The plan's funding and valuation can have a significant impact on the financial condition of the company. Company ABC offers a retirement plan wherein the amount owed to the participants at retirement is based solely on the account balance at the time of withdrawal with participants often bearing the responsibility for managing the investments in their account. Which of the following BEST describes the above two retirement plans and which act governs them? A. 403(b) and defined contribution plan; ERISA B. Defined benefit plan and defined contribution plan; ERISA C. Qualified and non-qualified plan; Pension Protection Act D. Defined benefit plan and defined contribution plan; Pension Protection Act

B

D NO.373 Company XYZ is a high technology company. It is planning on acquiring another company in the high technology sector. Company XYZ does not have enough cash to acquire the company and is planning on financing the acquisition through a bond offering. Which of the following measures is company XYZ MOST LIKELY to use in its analysis of operating profits considering it is a high debt transaction? A. Long-term debt to capital B. EBITDA margin C. Net profit margin D. Return on equity

B

D NO.378 What should a company's senior management consider in their payment policies to eliminate the co-mingling of funds for payables, receivables and foreign exchange transactions? A. Required control points B. Bank account structuring C. Payment laws and regulations D. Participants in the payment process

B

D NO.381 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. Zero Balance B. Time Deposit C. Demand Deposit D. Controlled Disbursement

B

D NO.386 A U.S. company's pension plan is managed by an investment management firm, headquartered outside the United States. The investment management firm outsources the accounting for the plan to an organization on the Office of Foreign Assets Control (OFAC) sanctions lists and the firm does not advise the U.S. company of this fact. A financial loss in the pension plan is later realized due to the mismanagement of funds. When establishing its contract with the firm to protect itself from losses in the pension plan, the company should have: A. identified the exception management process. B. included a limitation of liability clause in the contract. C. referred to the Foreign Corrupt Practices Act in the contract. D. specified what constitutes other-than-temporary-impairment for the investments.

B

A NO.317 Why would a company establish a short-term credit facility? A. Short-term interest rates are expected to rise. B. The company would like to improve bank relationships. C. Cash shortages are being forecasted due to seasonality. D. There is an anticipated failure of the company's main depository bank.

C

A NO.327 A U.S. company wants to increase its cash turnover rate. It is finding that customers are not taking the offered discount terms of 3/15, net 35. What action might the company take in order to achieve its goal? A. Increase the days' sales outstanding. B. Obtain short-term financing. C. Factor the accounts receivable. D. Change inventory accounting from FIFO to LIFO.

C

A NO.333 RAL Industries is a manufacturing company that currently has locations in the United States and Latin America and has just completed an acquisition of a company located in Europe. As a result of the acquisition, they have a large number of financial service providers. In an effort to reduce the number of providers and services used globally, RAL has decided to develop a formal selection process to consolidate its many global banking services. In order to reduce the amount of time the selection process takes, determine which services providers can offer, and the number of providers involved in the process, what should RAL Industries issue? A. Request for Quote B. Request for Proposal C. Request for Information D. Request for Participation

C

A NO.356 A company has grown quickly in the euro zone market. It wants to maximize its excess cash. Which would be the BEST method of concentrating funds? A. Bank Overlay B. Notional Pooling C. Physical Pooling D. Scheduled Transfer

C

A NO.384 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. Europe and Asia B. Asia and Latin America C. Europe and Middle East D. Middle East and Latin America

C

A NO.392 XYZ Company experienced a substantial monetary loss due to over exposure to one particular sector of the stock market. The Treasurer had invested in companies tied to five different sectors, but violated the company investment policy by exceeding a 10% limit for any sector. In developing its investment policy, what should XYZ Company have considered to prevent this scenario? A. Segregation of duties B. Exception management C. Internal and external controls D. Diversification of investments

C

A NO.399 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

C

B NO.313 Which of the following is an example of a Eurobond? A. A bond that is denominated in euros, issued in France by a French company. B. A bond that is denominated in euros, issued in the U.S. by a German company. C. A bond that is denominated in Japanese Yen, issued in the U.K. by a U.S. company. D. A bond that is denominated in U.S. dollars, issued in a European market by a U.S. company.

C

B NO.331 When a buyer receives goods, but payment is not due to the supplier until some later date, this is defined as: A. factoring. B. bank credit. C. trade credit. D. intercompany loan.

C

B NO.343 XYZ Company has incurred a financially devastating event because of a hurricane at its offshore manufacturing plant. Due to the impact on liquidity, the company may not be able to survive. What should the Treasurer have done in order to assess the risk associated with this type of event? A. Purchase sufficient insurance B. Negotiate back-up lines of credit C. Develop a contingency funding plan D. Evaluate financial derivatives contract

C

B NO.351 XYZ Holdco has multiple credit facilities with a bank under a borrowing agreement that includes certain covenants. A fire has destroyed the manufacturing plant owned by ABC, one of the XYZ subsidiaries that is part of the credit facilities. All loans, including the ABC loan, are up to date and being repaid as required. However, after the fire, the bank notified XYZ that it was in default. Which one of the following covenants is MOST LIKELY a term of the borrowing agreement? A. Technical default B. Cross-default provisions C. Material adverse change D. Total liabilities to assets ratio default

C

B NO.374 The Cash Manager of ABC Logistics, Inc. sets a daily cash position by noon. All departments have been given an 11 a.m. cut-off for presenting wire requests and 2 p.m. for ACH requests. A wire request came in at 3:30 p.m. to make an insurance premium payment, in order to receive a discount. What liquidity reserve requirement is impacted? A. Regulatory B. Transaction C. Opportunistic D. Precautionary

C

B NO.394 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? A. $200,000 B. $300,000 C. $500,000 D. $800,000

C

C NO.334 The Treasury Manager of a chain of department stores wants to develop a medium-term forecast. Management plans to open two new stores, and anticipates same-store sales to increase by 15%. Which of the following items can be predicted with the highest degree of certainty? A. Taxes on stock options B. New product sales C. Fixed bond interest payment D. Refranchising proceeds

C

C NO.335 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. Risk mitigation B. Objectives and scope C. Roles and responsibilities D. Performance measurement and reporting

C

C NO.336 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? A. Sovereign B. Operational C. Commodity price D. Foreign exchange

C

C NO.395 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 ofchecks 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? A. Securely store check stock. B. Set up international bank security. C. Implement dual approval. D. Implement data security standards.

C

D NO.302 A U.S. bank is actively trying to establish its operations in an emerging market country, but is not experiencing much success due to differences in the business culture. To gain some market share, an executive of the bank decides to give the son of a local dignitary a highly paid positionin the organization. Furthermore, the dignitary is a person of interest on various terror watch lists. Sanctions can be placed on the bank because the executive did NOT establish compliance with which of the following? A. Bank Secrecy Act B. Anti-Money Laundering C. Foreign Corrupt Practices Act D. Office of Foreign Assets Control

C

D NO.340 Due to a loss of proprietary information held for clients, ABC Company has been named in a billion dollar lawsuit. It was determined that the loss of information was due to a breach in its computer system firewalls by outside parties. When the lawsuit became public, the company experienced a steep drop in its stock price. This scenario is an example of what kind of risk? A. Internal technology B. Compliance C. External theft/fraud D. Market

C

D NO.347 ABC Company, a publicly held U.S. multinational, owns several manufacturing plants in Latin America as well as several ships to transport its products globally. 60% of its sales are from its eurobased subsidiaries. The company uses various derivative instruments to mitigate exposure to fluctuations in fuel prices and FX rates. The hedging deals are long-term and placed withmany counterparties. ABC Company is also a net borrower and has a syndicated credit facility in place. Which of the following actions to mitigate counterparty risk would MOST benefit the company? A. Eliminate specific AAA rated counterparties. B. Adopt a third-party custodian for investments. C. Implement or adjust single counterparty balance limits. D. Add to the number of counterparties to increase diversification.

C

D NO.353 During a company's cash flow analysis review it discovers that for every 10 new customers it gains, there is an increase of 2% in its float costs associated with the payment methods it offers. If the company pursues faster collection methods for payments, resulting in greater availability of surplus cash with a correlating decrease in the need to issue commercial paper, what risk will the company mitigate? A. Settlement B. Disbursement C. Liquidity D. Float

C

D NO.369 ABC Company's Treasury department outsourced its overnight investment duties to XYZ Money Management. XYZ placed the funds received from ABC into corporate commercial paper, which has recently gone into default after numerous ratings downgrades. The investment policy of ABC Company states that all investments must be in investment grade commercial paper; however, the agreement gives XYZ the ability to make exceptions with the approval of the Treasurer of ABC Company. The Treasurer was never notified of the ratings downgrades. What role or responsibility, if any, was violated with regards to the investment policy? A. Exposure horizon monitoring B. Valuation of investment vehicles C. Policy approvals and exception management D. No violation occurred

C

A NO.311 The regional offices of ABC Company implemented a system that would allow the employees to pass information between regions in a secure fashion. This system requires that all offices have the same key in order to read messages sent electronically. Which e-commence security type is MOST LIKELY being used? A. Secure sockets layer B. Layered authentication C. Public key infrastructure D. Shared secret key system

D

A NO.320 A portfolio manager would like to purchase U.S. 50 million of 10-year notes 3 months from now, but has heard news that the Federal Reserve will start a purchasing program of longer term treasuries that will include 10-year notes. The purchase program would likely cause a lowering of market interest rates. The manager would also like to avoid having to use margin on a daily basis. To remove the price risk that may be associated with the Federal Reserve purchasing program, the portfolio manager would MOST LIKELY enter into an: A. interest rate swap. B. interest rate collar. C. interest rate futures contract. D. interest rate forward contract.

D

A NO.346 XYZ Bank would like to conduct some foreign exchange transactions with JKL Bank. JKL isn't the most liquid and could have some credit risk. XYZ Bank should suggest which of the following in order to eliminate risk? A. Pre-authorized draft B. Straight-through processing C. Forward rate contract D. Continuous Linked Settlement

D

A NO.360 The Treasury Manager of a privately held company is looking to finance new equipment that has a useful life of 5 years. What type of financing would the Treasury Manager MOST LIKELY employ to finance the equipment? A. Equity shares B. Long-term bond C. High-yield bond D. Installment term loan

D

A NO.363 The CFO asks the Treasurer to create a new collections and concentration policy for their company. Following implementation of the policy, the company finds that reporting of receivables values is taking 10% longer, with no improvement in the company's cash flow or liquidity. What step in developing the policy could have been executed better? A. Drafting the policy B. Approval of the policy C. Procedure implementation D. Identify issues and conduct analysis

D

A NO.371 An electronics manufacturer is attempting to protect itself from financial losses due to projected high warranty claims costs for one of its technically complex products. What kind of assessment should the company perform to determine the appropriate external insurance coverage that would protect it from the claims? A. Exposure B. Insurability C. Avoidance D. Quantitative

D

A NO.380 An individual has just inherited several million dollars and has decided to purchase the stock of a telecommunications company to diversify his portfolio. Before purchasing shares, he would like to do some company-specific research to determine which company to select. Examples of the information the individual wishes to obtain are financial statements and disclosures, company organizational structure, code of conduct, pending litigation, and profiles of the board of directors. Who would be the BEST person to contact to obtain all this information? A. Corporate Treasurer B. General Counsel C. Enterprise Risk Manager D. Investor Relations Manager

D

A NO.397 The Treasury Analyst at an investment firm has entered the company into a repurchase agreement with a counterparty at the direction of the Treasury Manager. The compliance office has determined that the trade was done in violation of the company investment policy. The Treasury Manager has the power to approve the execution of trades; however, the Treasury Analyst was not a designated trader on behalf of the firm. Which area of the investment policy was violated by the Treasury Analyst? A. Segregation of duties B. Delegation of authority C. Exception management D. Roles and responsibilities

D

B NO.305 XYZ Company has a well established commercial paper (CP) program that they use to fund operations. The company is expanding by purchasing a new factory. The CFO is worried about the time and expense needed to issue long-term debt and decides to use the funds they raise in the CP market to pay for the purchase of the factory. This strategy will be successful if: A. an interest rate swap is used. B. a credit default swap is employed. C. a commodities future is purchased. D. the yield curve remains upward sloping.

D

B NO.387 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? A. Economic value added B. Net present value C. Residual income D. Free cash flow

D

C NO.337 Senior management at ABC Company plans to make a large capital expenditure to bolster its infrastructure exactly one year from now. Their primary concern is to preserve the current capital position until the expected cash outlay. The majority of the cash at ABC Company is held in treasury notes, but management would like to also invest some of the money into corporate bonds and money market funds. Which investment objective BEST suits the needs of ABC Company? A. Exposure Horizon B. Diversification C. Liquidity D. Safety

D

C NO.352 A treasury manager has $5 million that is not needed for 6 months. The treasury manager has decided to invest the funds in a liquid instrument, using the current portion of a 5-year AA rated corporate bond that is subject to U.S. Securities and Exchange Commission (SEC) regulations. In what market would the treasury manager purchase this investment? A. IPO Market B. Private Market C. Primary Market D. Secondary Market

D

C NO.357 Company ABC is a restaurant chain that has enjoyed a surge in customers' dining with not much of a profitability increase in the last couple of years. Following a bad restaurant review, customer traffic deteriorated with not much change in profitability. Which of the following BEST describes the cost structure of the company? A. Low variable costs B. Economies of scale C. Low financial leverage D. Low operating leverage

D

C NO.375 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. 2 B. 3 C. 30 D. 40

D

C NO.385 An analyst at XYZ United is in charge of setting up the bank accounts. Fraud is a major concern due to the analyst's past experience with previous employers. The analyst has estimated that the company will earn 3.7% on surplus cash. Surplus cash must be invested in short-term investment grade investments. The company's closest competitor earned 4.1% for its surpluscash in its latest fiscal year. What bank service should the analyst use to maximize the company's surplus cash? A. Payable Through Draft B. Reverse Positive Pay C. Zero Balance Account D. Controlled Disbursement

D

D NO.321 A merchant has a chargeback rate of 0.03% on average daily sales of $200,000. After switching to a new merchant acquirer that is a bank, the merchant sees the rate increase to 0.05% or $10,000. The merchant's analysis reveals that the bank maintains its data warehouse in another country where the system network is routinely hacked. What act or standard is being violated? A. Bank Secrecy Act B. Foreign Corrupt Practices Act C. Money Laundering Control Act D. Payment Card Industry Data Security Standard

D

D NO.338 XYZ Company has decided to purchase a close competitor. This acquisition would make XYZ Company the 4th largest in its industry allowing it better purchasing power and greater distribution channels. After completing the M&A analysis, it is determined that the combined companies would produce a 40% increase in revenue, reduce manufacturing costs by 30%, but would increase current liabilities by 27%. Which of the following would keep the acquisition from happening? A. Increased weighted average cost of capital B. Low return on investment C. Negative net present value D. Restrictive bond covenants

D

D NO.339 A daily short-term forecast and variance analysis for LMN, Inc. is updated with relevant trends and actual data every Monday. Upon review, the Treasurer assessed that sales were higher than forecasted, inventory was up and yields being earned on excess cash were lower. The MOST important reason for this cash forecast process is: A. financial control. B. managing costs. C. capital budgeting. D. liquidity management.

D

D NO.358 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? A. Low contribution margin B. High financial leverage C. Low variable costs D. High operating leverage

D

D NO.367 Based on the following information, what is the required collected balance to cover all monthly service charges? Deposit Float$10,000 Reserve Requirement5% Earnings Credit Rate15% Monthly Service Charges$6,000 Days in month30 A. $308,222 B. $456,000 C. $486,667 D. $512,281

D

D NO.368 A treasurer decides to use notional pooling across wholly-owned multiple legal entities instead of wiring money between entity accounts. What specific section in the company's policy allowed the treasurer to make this decision? A. Regulatory and legal considerations B. Liquidity strategy C. Collection strategy D. Concentration practices and strategies

D

D NO.372 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? A. $60,000 B. $97,500 C. $195,000 D. $247,500

D

D NO.376 Which of the following is an example of off-balance-sheet financing? A. Capital lease B. Zero-coupon bond C. Commercial paper D. Factoring receivables

D

D NO.377 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. May become a viable candidate for downsizing or outsourcing. B. Need to decentralize treasury operations in order to make a profit center more viable. C. Substantial headcount is required to support a profit generation center. D. Pressure to produce significant profits may lead to deferred losses and inefficient operations.

D

D NO.388 The Treasurer of a company would like to establish an investment policy for the organization. One objective that should be included in the investment policy that would BEST allow the organization to limit its exposure to a particular market sector would be to: A. perform a risk analysis. B. develop an exposure horizon. C. establish ratings requirements. D. set diversification requirements.

D

D NO.389 While revising the investment policy, the CFO performs a sensitivity analysis for the company's cash flow from investments, and identifies that increasing the maximum dollar value for bond purchases will improve returns by 10% on average, all other variables being equal. What issue will the CFO now need to address in the investment policy? A. Exception management B. Valuation of investments C. Internal and external controls D. Performance management and reporting

D

NO.301 Economists are forecasting a rise in gas prices within the next 3 months. Charged with the task of establishing a risk mitigation approach for the company, the CRO has determined that the company has considerable exposure to fluctuations in gas prices. In coming to this conclusion, the CRO: A. assessed financial derivatives. B. made a qualitative assessment. C. examined basic operating procedures. D. made a quantitative assessment.

D

NO.366 CT Check Cashing routinely cashes payroll checks from JD Software. Someone presents a fraudulent check from JD Software to CT Check Cashing. The fraudulent item looks virtually identical to JD Software's regular payroll checks. CT Check Cashing pays the person cashing the check the amount for which it is issued. CT Check Cashing later discovers that the check was fraudulent and wants JD Software to reimburse them for the amount of the check. Which of the following statements is correct? B. This item is payable through draft so JD Software will be liable to CT Check Cashing for the amount of the check. C. JD Software has a controlled disbursement account so CT Check Cashing will not have recourse against JD Software for this item. D. Positive pay is designed to reject the item, but JD Software may ultimately be held liable if CT Check Cashing is deemed to be a holder in due course.

D