Certified Treasury Professional - CTP Exam Practice Test

Question 1

Two months after a government overthrow, the new Minister of Industry and Culture took over the country's largest steel company and compensated the owners at 50% of book value. What is the government's action called?

A. Expropriation

B. Nationalization

C. Consolidation

D. Deregulation

Correct Answer: A

Question 2

Which of the following would be expected to happen on the ex-dividend date?

A. The stock price drops.

B. The stock is sold with the dividend attached.

C. The stock's dividend is paid.

D. The stock's volume increases.

Correct Answer: A

Question 3

Company XYZ is conservative when investing in their short-term portfolio. XYZ is looking to add the following money market instruments in their own country: a reverse re-purchase agreement, a floating-rate note, and a negotiable certificate of deposit. What types of investment risks are associated with these instruments?

A. Default and liquidity risk

B. Liquidity and price risk

C. Credit and price risk

D. Default, liquidity and price risk

Correct Answer: A

Question 4

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

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

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

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

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

Correct Answer: D

Question 5

Two critical factors in determining an operational risk management strategy for a company are:

A. physical security and the number of manual processes.

B. technology and data security.

C. industry standards and competition.

D. organizational culture and technology.

Correct Answer: D

Question 6

Which of the following is normally MORE significant for a corporation?

A. Defalcation events by employees

B. Firewall breaches by employees

C. Sarbanes-Oxley violations by employees

D. Unintentional actions by employees

Correct Answer: D

Question 7

Which of the following services allows a single account to be used by a company with multiple units?

A. High-order prefix

B. Positive pay

C. Check inquiry

D. Payor bank services

Correct Answer: A

Question 8

An investor is willing to participate in the initial bond issue of a trading company. The investor wants to be assured of his return although at the same time the company requires flexibility to adjust its balance sheet to future developments. What would the investor seek to have included in the indenture?

A. Banker's acceptance

B. Make whole provision

C. Export credit insurance provision

D. Non-call provision

Correct Answer: D

Question 9

Which of the following institutions would be regulated by the Office of the Comptroller of the Currency (OCC)?

A. Regency National Bank

B. Regency Federal Credit Union

C. Regency Savings and Loan

D. Regency Bank Holding Company

Correct Answer: A

Question 10

Optimal dividend policy is one that does all of the following EXCEPT:

A. distribute corporate income to investors.

B. balance tax shield benefits against agency costs.

C. maximize shareholder value.

D. maintain adequate retained earnings for future growth.

Correct Answer: B

Question 11

A company has experienced significant growth through acquisition. The treasury group would like to improve operations by bringing together the various financial services from previously separate businesses. The treasury group has identified the company's needs and service requirements for a customized solution. What should be the next step in this process?

A. Request for proposal (RFP)

B. Request for quote (RFQ)

C. Request for information (RFI)

Correct Answer: C

Question 12

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. set diversification requirements.

D. establish ratings requirements.

Correct Answer: C

Question 13

An electronics firm realizes that due to adverse events projected over the next 18 months there is a 5% chance that its profits will decrease by $100,000. The company's beta is .08 and its cost of capital is 9%. What approach is the company MOST LIKELY using to determine its level of financial risk?

A. Value at Risk

B. Sensitivity analysis

C. Scenario analysis

D. Monte Carlo simulation

Correct Answer: A

Question 14

What type of insurance provides payments to an organization if it is unable to continue operations for some period due to an unforeseen event?

A. Difference in conditions

B. Business interruption

C. Property

D. Casualty

Correct Answer: B

AFP Certified Treasury Professional - CTP Exam Practice Test

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