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AFP CTP Exam Dumps

Certified Treasury Professional

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Update Date : February 22, 2024
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AFP CTP Sample Questions

Question # 1

A Chicago meat processor is concerned about the volatility of pork belly prices. Which of the following derivative products would be used to fix these prices within a given range?

A. Collar
B. Swap
C. Cap
D. Spot purchase



Question # 2

An optimal concentration system minimizes all of the following EXCEPT:

A. administrative costs.
B. disbursement float.
C. excess balances.
D. transfer costs.



Question # 3

Company XYZ is now required to make electronic payments by its suppliers. To prevent an increase in costs, the company shoulD.

A. negotiate a change in payment timing with its suppliers.
B. institute a just-in-time inventory system.
C. negotiate a change in cash disbursement with its concentration bank.
D. institute a modified RSA system for its inventory.



Question # 4

In a typical swap transaction, two parties agree to exchange:

A. notional principal amounts.
B. amortization schedules.
C. maturity dates of obligations.
D. cash flows at future points in time.



Question # 5

If a company has $126 million in debt at an average cost of 7% and $234 million in equity at a cost of 11%, what is its weighted average cost of capital, assuming a marginal tax rate of 35% and a risk-adjusted rate of 13%?

A. 8.7%
B. 9.6%
C. 10.0%
D. 10.9%



Question # 6

Company A is a large public company with annual revenue of $1.2 billion and high fixed costs. Its stock is listed on the New York Stock Exchange. Company B is a mid-sized company with annual revenue of $100 million and low fixed costs. Its stock is listed on the NASDAQ. Which of the following statements is MOST LIKELY to be true when comparing Company A and Company B?

A. Company A has greater reporting requirements and more marketable stock than Company B.
B. Company A has greater reporting requirements and less marketable stock than Company B.
C. Company B has greater reporting requirements and more marketable stock than Company A.
D. Company B has greater reporting requirements and less marketable stock than Company A.



Question # 7

A company has a line of credit and a bond trustee agreement with a bank. To prevent a decline in the company’s bond rating from having a negative impact on the company’s line of credit, the bank should have which of the following in place?

A. Code of conduct
B. Confidentiality agreement
C. Notional barrier
D. Risk profile



Question # 8

The accounting requirement that a product’s selling costs be recorded in the same period as the product’s revenue is recorded, regardless of when the cash is paid, is an example of the:

A. full disclosure principle.
B. historical cost principle.
C. matching principle.
D. revenue recognition principle



Question # 9

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

A. AMEX
B. FINRA
C. NASDAQ
D. NYSE



Question # 10

Which of the following trade payment methods virtually eliminates the seller's credit risk?

A. Bankers’ acceptance
B. Cash before delivery
C. Countertrade
D. Consignment



Question # 11

The purpose of cash letters is to:

A. arrange currency deliveries from the Fed.
B. request payment under standby letters of credit.
C. collect merchant charge-card sales.
D. facilitate the clearing of paper checks.



Question # 12

When estimating the cost of capital, which of the following financial resources would probably NOT be included in the cost of capital calculation?

A. Common stock
B. Long-term debt
C. Preferred stock
D. Short-term debt



Question # 13

One of the advantages of raising capital through public offerings is that:

A. it reduces fluctuations in the price of capital.
B. it reduces the costs of managing reporting and disclosure.
C. large amounts of debt and equity can be raised at the risk-free rate.
D. large amounts of debt and equity can be raised at prevailing rates.



Question # 14

All of the following statements are true about loan participations EXCEPT:

A. more than one lender commits to them.
B. loan advances and payments are divided among the participants.
C. loan servicing is provided by the lead institution.
D. they are traded in the secondary market.



Question # 15

Convertible securities consist of preferred stock anD.

A. treasury stock.
B. common stock.
C. bonds.
D. tracking stock.



Question # 16

A prearranged ACH payment normally includes which of the following?I. A fixed payment amountII. A provision for immediate availabilityIII. A predetermined payment date

A. I and II
B. I and III
C. II and III
D. I, II and III



Question # 17

In terms of capital structure, lease financing normally has the same effect as:

A. investing.
B. borrowing.
C. capitalizing.
D. lending.



Question # 18

A call option for a company has an exercise price of $50. The stock is currently trading at $60. At maturity, what should an investor who paid $3 for the option do?

A. Exercise the option and gain $7.
B. Exercise the option and gain $10.
C. Not exercise the option and lose $3.
D. Not exercise the option and lose $13.



Question # 19

Which of the following can be used for monitoring accounts receivables?I. Aging scheduleII. Credit termsIII. Days' sales outstandingIV. Receivables balance pattern

A. I and II only
B. I and IV only
C. I, III, and IV only
D. II, III, and IV only



Question # 20

Which agency implements monetary policy through purchases and sales of treasury securities?

A. Federal Deposit Insurance Corporation
B. Fannie Mae
C. Office of the Comptroller of the Currency
D. Federal Reserve



Question # 21

Which of the following are primary objectives of cash forecasting?I. Managing liquidityII. Optimizing floatIII. Enhancing financial controlIV. Minimizing borrowing costs

A. I and II only
B. II and III only
C. I, III, and IV only
D. I, II, III, and IV



Question # 22

When a project has an initial cash outflow with cash inflows in subsequent years, what decision model is most applicable to use to evaluate the adequacy of the project?

A. Monte Carlo
B. Net present value
C. Payback period
D. Profitability index



Question # 23

A company transmits a payment file of ACH and Fedwire vendor payments to its financial institution to execute. Which article of the Uniform Commercial Code governs these payments?

A. Article 3
B. Article 4
C. Article 4A
D. Article 5



Question # 24

The time from the deposit of a check in a bank account until the funds can be used by the payee is known as:

A. collection float.
B. mail float.
C. processing float.
D. availability float.



Question # 25

The goal of a successful investor relations program is to ensure:

A. achievement of the company’s earnings-per-share goal.
B. accurate preparation of financial statements.
C. on-time filing of reports.
D. effective two-way communication between a company, the financial community, and other constituencies.



Question # 26

A U.S. exporter sells goods to a foreign buyer in U.S. dollars and wants to guarantee that payment is made by the buyer. The exporter would MOST LIKELY require a(n):

A. bankers’ acceptance.
B. documentary collection.
C. letter of credit.
D. open account.



Question # 27

Which of the following is a ratio that is often used by commercial banks to measure a company’s leverage and does not include the effect of assets that are difficult to value or are NOT easily converted to cash?

A. Long-term debt to capital
B. Debt to tangible net worth
C. Total liabilities to total assets
D. Cash flow to total debt



Question # 28

The time between when the payor mails the check and the payee receives available funds is known as:

A. mail float.
B. processing float.
C. availability float.
D. collection float.



Question # 29

Company A regularly modifies its capital structure by repurchasing stock. Which one of the following is a true statement?

A. Investors may feel that management is manipulating the stock price.
B. Stock repurchases are not an attractive alternative to dividend payments.
C. Partial disclosure to the SEC is required for repurchases.
D. Stock repurchases do not offer tax deferral advantages over dividends.



Question # 30

In evaluating alternative capital investments, a company should consider qualitative factors such as:

A. projected cash flows.
B. estimated economic returns.
C. corporate strategy.
D. estimated costs.



Question # 31

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. Let the put option expire.
B. Exercise its put option.
C. Purchase a call option at 1.85.
D. Purchase a spot contract at 1.85.



Question # 32

Future treasury operations will be affected MOST significantly by consolidation of which of the following?

A. Competitors
B. Subsidiaries
C. Commercial banking industry
D. Procurement cards



Question # 33

Which of the following is NOT a drawback to using ROI as a performance measure?

A. It may be misleading when cash flows are not evenly distributed over time.
B. It does not consider the profit generated by a project.
C. It does not include a charge for cost of capital.
D. It may lead to rejection of a positive NPV project.



Question # 34

A KEY feature of municipal bonds is that they are:

A. exempt from federal income taxes.
B. issued on a discount basis.
C. rated by the Comptroller of the Currency.
D. available through the Treasury Direct Program.



Question # 35

What is the MOST appropriate rate used as the discount rate in calculating NPV?

A. Marginal cost of capital
B. IRR
C. Cost of debt
D. Internal transfer rate



Question # 36

Netting is used by which of the following as a cross-border payment technique?

A. European giro providers
B. Foreign subsidiaries of a company
C. Counterparties in a letter of credit transaction
D. TARGET participants



Question # 37

A retail lockbox system is characterized by which of the following?I. An emphasis on processing costII. Detailed information on discounts takenIII. Small-dollar amounts per invoiceIV. Multiple invoices per payment

A. I and II only
B. I and III only
C. I, II, and III only
D. II, III, and IV only



Question # 38

Which of the following is subject to transaction exposure?

A. A U.S. company’s foreign subsidiary in Japan has a receivable denominated in Yen.
B. A Japanese company’s foreign subsidiary in the U.S. has a receivable denominated in Yen.
C. A U.S. company’s foreign subsidiary in Japan has a payable denominated in Yen.
D. A Japanese company’s foreign subsidiary in the U.S. has a payable denominated in dollars.



Question # 39

A company is starting a project to redesign its cash management information systems. What would be an important tool in this effort?

A. ERP software
B. Treasury operations manual
C. Cash application
D. Treasury workstation



Question # 40

Which statement is typically true about cash dividends?

A. They are an expense to the company.
B. They are a distribution of profits.
C. They are based on the value of the company's stock.
D. They are declared by the chief financial officer.



Question # 41

The right of stockholders to purchase, on a pro-rata basis, any new shares issued by the company is referred to as:

A. preemptive right.
B. right of first refusal.
C. existing ownership right.
D. prevention of dilution right.



Question # 42

Company XYZ has determined that its weighted average cost of capital is 12.5%. The capital structure of the company is made up of 75% equity and 25% debt. The before-tax cost of debt is 10%. Given a tax rate of 34%, what is XYZ's cost of common stock?

A. 13.25%
B. 14.47%
C. 15.25%
D. 16.53%



Question # 43

In which of the following instances does the clientele effect come into play?

A. When a company announces its earnings forecast
B. When a company submits its 10-Q to the SEC
C. When a company declares a dividend
D. When a company increases its sales



Question # 44

Which of the following are important uses of variance analysis in comparing actual cash flows with projected cash flows?I. Identifying unanticipated changes in inventoryII. Enhancing short-term investment incomeIII. Validating a capital budgetIV. Identifying delays in accounts receivable collections

A. I and II only
B. I and IV only
C. II and IV only
D. I, II, III, and IV



Question # 45

Financing decisions in a budget are used to construct all of the following pro forma financial statement components EXCEPT:

A. debt.
B. interest expense.
C. shareholder’s equity.
D. inventory.



Question # 46

Regarding dividends, on which of the following dates would a company's current assets be reduced?

A. Declaration date
B. Ex-dividend date
C. Payment date
D. Record date



Question # 47

The Governmental Accounting Standards Board (GASB) is the authoritative standardsetting body for which of the following?

A. Private universities
B. Healthcare organizations
C. Public works agencies
D. Publicly traded companies