EMT Practice Test

1. Question Content...

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Question1: Which of the following is an important component of corporate governance?

Question2: Which of the following is NOT a component of the operating cycle?

Question3: Companies that seek out other companies that have successfully redesigned their operations are engaging in a process called:

Question4: Subtracting dividends from net income available to common shareholders is reflected as a change to which of the following balance sheet items?

Question5: Which of the following contributes MOST to the marketability of a security?

Question6: A large mature company with limited growth opportunities (positive NPV projects) achieved abnormally high profits this year. After paying mandatory principal, interest, and taxes, the company has $200 million in surplus cash on hand. Assuming its investor base is most concerned with capital appreciation, which of the following is the BEST option for the company?

Question7: A company hires an investment firm to fully underwrite a new stock issuance. Which of the parties carries the MOST risk?

Question8: When a short-term loan is paid with a lump sum payment and the payment includes both interest and principal, the loan is often referred to as a:

Question9: A corporation is considering utilizing ACH transactions for its large value transfers, as opposed to wire transfers. Which of the following would MOST LIKELY deter the corporation from implementing this change?

Question10: A treasury manager at a multinational manufacturing corporation assigned a team of analysts to re-engineer the company's FX exposure management program. Which of the following alternatives would BEST accomplish this objective?

Question11: XYZ Company is considering different methods of concentrating cash from its subsidiary accounts to its main operating account. It uses short-term borrowings with a rate of 7% to fund daily operations, and the reserve adjusted earnings credit rate on its subsidiary accounts is 1%. A review of its bank fees shows that wires (same day transfer) cost the XYZ Co. $7.00 each while ACH debits (next day transfer) cost $1.25 each. If the primary objective is to minimize costs, what must the transfer amount be (rounded to the nearest whole $) to justify the use of a wire transfer instead of an ACH to concentrate the funds?

Question12: A firm's air conditioning unit breaks down unexpectedly and must be replaced immediately. What type of liquidity requirement is this an example of?

Question13: Company A regularly modifies its capital structure by repurchasing stock. Which one of the following is a true statement?

Question14: With respect to the Sarbanes-Oxley Act, a company may avoid additional reporting requirements by:

Question15: EML Inc., which has $600 million in outstanding debt, is preparing to issue commercial paper in excess of $100 million within the next six months. The new assistant treasurer has recently spent time getting to know the issuing and paying agent, the rating agency analyst, and the legal counsel, and has been following the financial markets. What is this is an example of?

Question16: Which of the following is subject to translation exposure?

Question17: 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

Question18: Which of the following prohibits price discrimination among customers where cost differences do NOT exist?

Question19: Company XYZ has an underfunded defined benefit plan. Company XYZ is required to provide filings for this plan to all of the following EXCEPT:

Question20: Companies in the U.S. with a nationwide over-the-counter/field bank collection and concentration system often deal with:

Question21: 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?

Question22: A company is looking to improve its collection rate of returned checks. If the company implements re-presented check entry (RCK) with its bank, it might see a reduction in what type of returned items?

Question23: A company seeking an insured investment would avoid investing surplus cash in a:

Question24: Which of the following statements BEST applies when evaluating fees in an RFP for bank services?

Question25: The fixed costs to manufacture widgets are estimated to be $54,000. The benefit (sales) of a widget is estimated to be $6.78 per unit, and the variable costs are estimated at $4.48 per unit. What is the estimated break-even point in units for the manufacture of widgets (rounded to the nearest unit)?

Question26: The Public Company Accounting Oversight Board (PCAOB):

Question27: Treasury management systems help cash managers do which of the following?
I) Reduce borrowing expenses
II) Initiate transfers
III) Determine cash position
IV) Obtain account balances

Question28: 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?

Question29: An international company would establish a re-invoicing center for which of the following reasons?

Question30: A convenience store chain would typically use which of the following types of collection systems?

Question31: A shareholder right found in many corporate charters is the preemptive right which provides:

Question32: Which section of the statement of cash flows includes items that represent the cash inflows and outflows related to the daily functions of a company?

Question33: Which of the following is a KEY objective when instituting a collection and concentration policy?

Question34: The risk that one financial institution's failure could lead to the failure of other financial institutions is known as:

Question35: Given the above information, if the risk manager adds a tank at its second facility, what loss control technique is being used?

Question36: In a partial reconciliation, a bank provides a company with which of the following?

Question37: 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?

Question38: A lockbox provider offers which of the following advantages over a company processing center?
I.It increases the company's operational control.
II.It produces processing economies of scale.
III.It allows for external audit controls.
IV.It reduces collection float.

Question39: The use of debt to finance a company is called:

Question40: Company ABC needs external capital to finance a new product line. Its operating leverage is high, and its revolving credit agreement contains a ratings trigger. What will Company ABC MOST LIKELY do to finance its new product line?

Question41: An asset-based lender has decided to provide a loan to a company. In order to perfect its security interest in the assets used as collateral with the potential borrower, the lender will be MOST interested in reviewing which of the following?

Question42: A manufacturing company's long-term capital structure is 30% debt and 70% equity, its cost of equity is 10%, its average cost of debt is 8%, and the marginal tax rate is 34%. If the company has invested total capital of $567,865 in its production unit and the unit's operating profit is $79,856, what is the economic value added (EVA) of the unit?

Question43: Which of the following are KEY issues to be considered when establishing a shared service center (SSC)?
I) Selecting the location
II) Comparing an SSC structure to outsourcing of a process
III) Choosing and implementing the technology for SSC
IV) Choosing the collection bank

Question44: A manufacturing company selling engines and other mechanical equipment, with invoices averaging $15,000, would use which of the following systems?

Question45: Unrealized holding gains and losses arise when trading securities are:

Question46: Which of the following is sought from a typical cash management services Request for Proposals (RFP)?

Question47: Under a loan agreement, which of the following could be an event of default?
I. Nonpayment of interest when due
II. A material adverse change in the condition of the borrower
III. A debt-to-equity ratio above the limit specified
IV.
Shortening the cure period by half

Question48: On a statement of cash flow, which of the following items are considered sources of cash?
I. Increase in short-term investments II. Net income
III. Increase in accounts payable
IV.
Decrease in long-term debt

Question49: The treasury analyst at RST Corporation has been asked to forecast cash levels for the company's year-end balance sheet. The analyst has been given the following information: What should the analyst project as the upcoming year-end cash balance?

Question50: An analysis of variances from expected cash flows is used to:

Question51: A major toy retailer operates 65 stores throughout the Midwest. Which of the following collection methods is MOST LIKELY to be used by this company?

Question52: If the spot foreign exchange rate and the forward foreign exchange rate are the same between two countries, which of the following is implied?

Question53: Transmission of a file of items presented for payment by the payor bank to the issuing company is known as:

Question54: A national retailer's cash management system includes a field deposit system using multiple banks. To limit the impact of a failure of one of these banks, a cash manager should:

Question55: U.S. dollar-denominated instruments issued by foreign banks through their domestic branches are known as:

Question56: An L/C in favor of a U.S. exporter is issued by a bank in an emerging-market country, and it is confirmed by the exporter's bank. What risk is reduced for the U.S. exporter?

Question57: To acquire an asset without putting debt on the balance sheet, a company should consider which of the following arrangements?

Question58: Company M operates a grocery distribution business on Main Street. As part of its business continuity plan, Company M intends to purchase insurance to cover the facility lease for its Main Street warehouse in the event it cannot operate for a period of time. What type of coverage should Company M purchase?

Question59: 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?

Question60: A multidivisional domestic company with centralized treasury decision-making can potentially utilize intra-company lending to:

Question61: All of the following are discounted instruments EXCEPT:

Question62: I. Banker's acceptances
II. Commercial paper
III. U.S. Treasury bills
IV. Federal agency securities
Which of the following is the MOST usual ranking, from lowest to highest risk, of the investments listed above?

Question63: Which of the following statements are true about collected balances?
I.They can be lower than ledger balances.
II.They are influenced by the bank's availability schedule.
III.They exclude negative account balances.
IV.They may generate an earnings credit.

Question64: 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?

Question65: Multinational corporations repatriate funds from foreign operations through which of the following?

Question66: Which statement is true about credit unions?

Question67: All of the following are account reconciliation services EXCEPT:

Question68: Financial ratios may provide an inaccurate forecast of a company's performance because they are:

Question69: Which of the following is NOT one of the three goals of a disbursement system?

Question70: Which of the following are commonly used for financing accounts receivable?
I) Factoring
II) Issuing credit cards
III) Revolving bank loans
IV) Letters of credit

Question71: Which of the following would MOST LIKELY cause a decrease in a company's deposited checks availability?

Question72: For days' sales outstanding to be a meaningful method for evaluating the effectiveness of a company's receivable collections, it is usually compared to the:

Question73: Simplifying upgrades and system restoration, access from multiple remote locations, and interfacing with multiple applications are all reasons to:

Question74: Which of the following situations is the best example of transaction exposure?

Question75: A company has six fraudulent checks clear its primary disbursement account for a total of $7,652. The bank agrees to split the loss with the company to maintain a good relationship.
As a condition of sharing the expense, the bank requires the company to establish positive pay on its disbursement accounts or have the company absorb the losses on future fraudulent payments.
If the company determines that positive pay is too expensive and decides NOT to implement it, what type of risk financing technique is the company using?

Question76: The Governmental Accounting Standards Board (GASB) is the authoritative standard-setting body for which of the following?

Question77: Which of the following is a true statement about operating leverage?

Question78: Following the latest round of cost-cutting measures at ABC Corporation, the Treasury Department retained a headcount of 2 individuals. While the analyst was out sick, she gave her password to her Manager so that payments could be released via the bank's wire transfer system. The Manager sent 3 wires out with incorrect banking instructions. The problem was not identified until the angry suppliers called several weeks later demanding payment. The corporation has not yet recovered the $130,000 sent to erroneous accounts. In this instance, which control failed for ABC Corp.?

Question79: ABC Ltd. uses a third party lockbox provider to collect and clear its paper receivables. A customer disputes the price charged for a binding machine and issues a check to ABC Ltd. for 50% of the balance due, noting "paid in full" on the face of the check. The third party provider does not bring the check to ABC's attention prior to depositing it. Which regulation allows ABC to attempt to collect the remaining balance?

Question80: Company X, a US based multi-national, is exploring the option of locating a subsidiary in another country where there has been some historical risk of expropriation of local assets of foreign corporations. Therefore, as part of the risk assessment process the company must specifically quantify the:

Question81: A small regional bank is losing market share in fiduciary services and the CEO has decided to scale back the trust department. Which of the following is considered a core service of a trust department?

Question82: Which of the following is NOT characteristic of commercial paper with a term of less than 270 days?

Question83: Which of the following is true of return on investment (ROI)?

Question84: Disbursement float includes which of the following three float time intervals?

Question85: 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:

Question86: Treasury policies and procedures should outline roles and responsibilities for which of the following activities?

Question87: Which of the following would be the most efficient method of reducing the number of cross-border payments between two units of a company?

Question88: Which of the following is NOT a method multinational companies (MNC) use to repatriate capital?

Question89: A company transfers funds from its remote accounts by ACH with a one-day settlement and is notified of a same-day credit of $100,000 in one of its accounts. A wire transfer costs $27.75 incrementally. Assuming a 360-day year, which of the following is the minimum rate of interest that must be earned on these funds to justify the cost of a wire transfer?

Question90: Which two of the following are necessary to calculate average collected balances?
I. Deposit float
II. Reserve requirements
III. Ledger balance
IV.
Earnings credit rate

Question91: Which of the following industries is MOST LIKELY to use a sophisticated cash concentration system with multiple banks as part of its cash management system?

Question92: Which of the following is an example of a company's internal data used for cash management?

Question93: 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?

Question94: Treasury uses which of the following internal sources of information in its daily operations?

Question95: The goal of investor relations is to:

Question96: All of the following are common consumer-to-corporate international payment mechanisms EXCEPT:

Question97: A company purchases a machine tool with an expected life of 3 years. Under the accrual accounting method, the equipment would be treated in which of the following ways?

Question98: There are 31 calendar days in the month, and the opportunity cost of funds is 9%.

What is the annual cost of float for the batches listed?

Question99: Which of the following will MOST LIKELY be affected when a company changes its terms from net 30 to 2/10 net 30?

Question100: The relationship between debt and equity in a company's capital structure is called:

Question101: Which of the following would be used to evaluate only the effects of varying interest rates while holding all other values constant at their expected levels?

Question102: Company ABC has undergone substantial system enhancements in order to take advantage of B2B efficiencies. To encourage its trading partners, ABC has offered a 1.5% discount to those who allow ABC to debit their bank account electronically on the day the product is delivered. The greater number of trading partners who agree to this arrangement, the greater improvement Company ABC will see in its:

Question103: 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?

Question104: T-bill discount rate = 5.85% T-bill face value = $100,000 Initial term = 90 days
What is the bond equivalent yield on this T-bill?

Question105: Trade terms are renegotiated under e-commerce in order to:

Question106: A put option is out of the money when the asset price:

Question107: Which of the following is an advantage of a centralized treasury function?

Question108: An airline has entered into an agreement with its partners to offset receivables and payables for a specified period of time and to transmit or receive the difference via funds transfer at the end of the period. This is an example of:

Question109: Under which of the following circumstances is lengthening the disbursement mail float NOT a benefit to the disbursing company?

Question110: Which two of the following are methods for concentrating weekend deposits in a field deposit system?
1.Using a wire transfer for the funds on Monday 2.Anticipating deposits and initiating an ACH on Friday 3.Initiating an ACH cash concentration transaction on Thursday
4.Using a multibank lockbox network

Question111: A company's basic investment objectives should include all of the following EXCEPT:

Question112: Which of the following is the MOST accurate statement regarding the passage of the Sarbanes-Oxley Act?

Question113: Which of the following ways of financing accounts receivable requires a company to relinquish control of the type of customer to which it sells?

Question114: Which agency appoints the chairman and members of the Public Company Accounting Oversight Board?

Question115: Which of the following is LEAST important when a cash manager determines a company's short-term cash position?

Question116: When evaluating candidates who have responded to an RFP for banking services, a highly leveraged company will probably apply a higher weighting to:

Question117: Regarding dividends, on which of the following dates would a company's current assets be reduced?

Question118: Exhibit:

What is the price to earnings ratio for Company ABC?

Question119: XYZ Inc. is a publicly traded company with revenues of $1B and an operating profit of 7.5%. The treasury organization consists of a treasurer and an assistant treasurer. The assistant treasurer is responsible for the creation and approval of all payments. The treasurer is responsible for compilation of the financial statements. Under Section 404 of the Sarbanes-Oxley Act, what should be viewed as a concern?

Question120: If a corporation pays 70% of its current earnings to its stockholders in the form of cash dividends, the remaining 30% kept by the company will cause a(n):

Question121: To arrive at today's projected closing cash position, a cash manager starts with:

Question122: What is one chief advantage of issuing short-term securities in book-entry form?

Question123: The company's monthly credit sales are in Table 1 and its receivables collection pattern is in Table
2. If this company wishes to achieve a second quarter (April-June) DSO of 60 days, what would its ending accounts receivable balance need to be?

Assume a 90-day quarter.

Question124: A small group of investors is purchasing a company using a large amount of debt. This group is intending to sell off pieces of the acquired company to other firms that it believes can take advantage of potential synergies. What is this type of a transaction more specifically known as?

Question125: Which of the following would be true for a company with high operating leverage?

Question126: An employee who became vested in his/her employer's retirement plan upon reaching five years of service decides to resign after working for seven years.

However, he/she will not reach retirement age for another six years. Referring to the employee's annual earnings above, if the plan is structured as a cash balance plan, what is the value of the employee's plan if benefits accrued at 8% per year and future annual salary inflation is 3%?

Question127: What is the premium (price) for an oil contract, if the following conditions are present?
LIBOR rate of 5% Out of the money cost of $3 Strike price is $4 In the money price of $1 Speculative premium of $2

Question128: This question is based on the following data describing a company's actual deposits.

If a five-day moving average is used, what was the deposit forecast for day six?

Question129: James Corp has a 7.98% WACC and an assumed tax rate of 30%. James Corp employed EUR70,000,000 of capital (long-term debt and equity) in a project that generated an operating profit of EUR9,500,000, after depreciation expense of EUR300,000. EVA in this case would be:

Question130: A multinational company (MNC) that operates a shared service center charges its foreign subsidiaries a management fee. This management fee may need to be:

Question131: A company's capital structure includes $800,000,000 in total capital, of which $200,000,000 comes from debt. The firm's after-tax cost of debt is 6%, and its cost of equity is 12%. The marginal tax rate is currently 40%. What is the company's weighted average cost of capital?

Question132: 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?

Question133: 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?

Question134: A U.S. based multinational company is filing its U.S. tax return and notes that its U.K. subsidiary had pre-tax income equal to $1 million. The U.K. subsidiary paid an effective tax rate on this income of 40%. If the U.S. tax rate is 34%, what will be the amount of the foreign tax credit on the U.S. tax return related to the U.K. income?

Question135: A United States corporation purchases finished products from a German subsidiary and sells raw materials to the subsidiary several times in one month. To minimize foreign exchange transaction costs, the U.S. corporation's cash manager would MOST LIKELY use:

Question136: A company may choose to use a derivative to reduce risk on which of the following types of exposure?
I) Currency
II) Interest rate
III) Commodity price

Question137: What is the MOST appropriate financial plan when a corporation wishes to establish its overall goals and objectives over a period of time?

Question138: A company can dispute any check alterations within how many days after the bank statement has been sent?

Question139: A company invests in a bond and then later agrees to sell the bond to a bank with the understanding that the company will buy the bond back at a later time. This is known as:

Question140: A company may choose to outsource some of its cash management processes to:

Question141: A company pays its vendors with the following methods:
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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?

Question142: Examples of traditional factors used in making a credit decision include which of the following?
I. Capacity
II. Capital
III. Compliance
IV.
Character

Question143: To increase the money supply, the Federal Reserve would increase which of the following?

Question144: Treasury management systems and ERP systems allow companies to do all of the following EXCEPT:

Question145: Which of the following global cash concentration methods would be MOST appropriate for a company with operations in the United States, Germany, Mexico, and Japan?

Question146: Which cost benefit analysis technique uses the methodology to find where the present value of each project's cash inflows equals the present value of each project's outflows?

Question147: 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?

Question148: All of the following are advantages of forward contracts EXCEPT they:

Question149: Improvements to the cash flow timeline from a selling company's perspective would include:

Question150: On the basis of the data above, what is the forecast for Thursday's cash receipts, under the exponential smoothing method?

Question151: Compared to a letter of credit, a documentary collection is:

Question152: I) Banker's acceptances
II) Commercial paper
III) U.S. Treasury bills
IV) Federal agency securities
Which of the following is the MOST usual ranking, from lowest to highest risk, of the investments listed above?

Question153: A U.S. government agency issues securities transfers using Fedwire Book-Entry Securities System. The first transfer request of the day in the amount of $1 million is sent at 1:00 p.m. EST, the second one for $2 million at 3:30 p.m. EST, the third one for $3 million at 4:30
p.m.
EST and the fourth one for $4 million at 5:00 p.m. EST, all on the same day. Which of the following represents the total value transferred at 5:00 p.m. EST that day?

Question154: Which of the following is a common approach to negotiating EDI payment terms versus paper payment terms?

Question155: EDI infrastructure includes which of the following four PRIMARY components?

Question156: Which of the following statements is typically true about a net settlement system?

Question157: A disclaimer opinion is required on a set of financial statements when:

Question158: With the advent of the euro, many U.S. companies have seen a reduction in their number of foreign currency transactions. As a result, these U.S. companies have benefited from which of the following?
I. Reduced FX transaction costs
II. Consolidated banking relationships
III. Simplified exchange risk management
IV.
Reduced need to monitor foreign political climates

Question159: After several internal discussions about treasury management systems (TMSes), ABC Company has determined that it has no need for customization but that it does want a backup for high priority capabilities. The company wants to reduce its IT costs and resources but still have IT support with in-depth knowledge of the solutions available. These parameters will MOST LIKELY result in what kind of TMS?

Question160: A cash manager invests in Treasury bills for which of the following reasons?

Question161: All of the following items may be found on an income statement EXCEPT:

Question162: A company is evaluating a project. What is the appropriate discount rate that it should use if its marginal tax rate is 34%, its capital structure is 40% common equity, and 60% debt. Its cost of equity is 10%, and its average cost of debt is 4%?

Question163: 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?

Question164: Each of the following statements is true of both defined benefit plans and defined contribution plans EXCEPT:

Question165: The delay between the time a check is deposited and the time the company's account is credited with collected funds is known as:

Question166: The treasurer of a corporation is negotiating with one of his/her suppliers to allow the corporation to have 30 days to pay the supplier's invoices. The treasurer is arranging:

Question167: An institutional investor has purchased an investment that provides a fixed rate of return with some potential for delays in payments. The return is 70% tax deductible for this particular investor. What type of investment was MOST LIKELY purchased?

Question168: Which scenario provides the BEST example of an agency problem?

Question169: A foreign company could raise capital in the United States using an:

Question170: A currency swap is BEST described as an:

Question171: The PRIMARY difference between defined benefit and defined contribution pension plans is whether the employee or the employer:

Question172: ACCOUNTS RECEIVABLE AT THE END OF MARCH

On the basis of the accounts receivable balance pattern above and April sales of $600, the cash flow forecast for April is:

Question173: DGB Inc.'s CEO and founder retired shortly after the company went public two years ago. DGB Inc. has recently struggled, and the founder has agreed to return as an independent director. What violation, if any, has occurred?

Question174: A company's credit agreements or loan covenants may require:

Question175: 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?

Question176: The term "collection float" is defined as the delay between the time the payor:

Question177: A U.S. exporter has agreed to export goods to a Canadian buyer with net 30 payment terms due in Canadian dollars. What type of risk is the exporter exposed to?

Question178: Compared to debt, which of the following statements is true about a company issuing equity?

Question179: What type of tax does a multinational auto manufacturer commonly pay in foreign countries at each stage of a vehicle's production?

Question180: A large multinational company recently implemented new processes to automate its treasury operations. If these changes were the direct result of comparing the company's practices with those of other companies, the activities could be considered an example of which of the following?
I) Liquidating
II) Re-engineering
III) Benchmarking
IV) Forecasting

Question181: The MOST effective way to reduce the internal risk of technology as it relates to critical treasury functions is to:

Question182: A company determines that no combination of risk control or financing techniques will produce an adequate, risk-adjusted rate of return on manufacturing a new product. It decides to discontinue the product line. This is an example of:

Question183: A company with a relatively poor credit rating borrows most of its funds with short maturities. They may want to change its exposure to interest rates to more correctly reflect the long-term nature of the projects it is funding. Or, they may believe that long-term interest rates are going to rise, causing it to seek protection against the impact of higher interest rates on its balance sheet. Which of the following would be a solution?

Question184: The cash manager for a company is creating a list of transactions that should be considered when determining the daily projected closing cash position. Which of the following transactions should be removed from the list?

Question185: A company has decided to manage its short-term investment portfolio in-house. It is looking for enhanced capital gains as well as the ability to sell the instruments on the secondary market at a premium. The investment manager has forecasted the interest rates shown below:

Which investment strategy should be employed by the company?

Question186: Financial statement preparation guidelines are provided by:

Question187: Company XYZ's government relations team has done a poor job in maintaining and nurturing its relationship with the local government. Because of new business ventures it is pursuing, the company needs a method that will help it monitor and collect international accounts receivables between subsidiaries. What technique is more suited given its situation?

Question188: A bank's reserve requirement on demand deposits is 10%, and its earnings credit rate is 6%. If a company uses bank services amounting to $2,600 and has an excess of $550 in earnings credit, what is the average collected balance in the account based on a 30-day month?

Question189: A company agrees to pay JPY10,000,000 for a shipment from Japan. At the time the purchase order is placed the exchange rate is JPY168/US$. At the time of payment the exchange rate is JPY163/US$. What is the net effect on the dollar cost of the shipment if the transaction has NOT been hedged?

Question190: 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?

Question191: Capital budgeting decisions are most commonly evaluated in terms of:

Question192: XYZ Company's cash manager is evaluating cash concentration transfer options. The company has an 8% cost of funds and $50,000 in average daily field cash receipts. The wire transferresults in the transfer of funds one day faster. Which of the following options correctly ranks the transfer choices from most cost-effective to least cost-effective?
1.Electronic depository transfer costing $1.00
2.Electronic depository transfer costing $2.50
3.Wire transfer costing $8.00
4.Wire transfer costing $15.00

Question193: In an organization with personnel limitations, which of the following strategies should be considered to mitigate cash management system risk?

Question194: 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?

Question195: Which of the following functions is LEAST likely to be part of a cash manager's responsibilities?

Question196: Netting is used by which of the following as a cross-border payment technique?

Question197: A public corporation may value a defined contribution plan highly because it:

Question198: When evaluating a FSP during the RFP process, a company should place a high value on a FSPs financial strength when the provider:

Question199: Usually, corporations receiving dividends from another corporation can exclude 70 percent of dividend payments from income for tax purposes as long as the stock is owned for at least:

Question200: 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

Question201: A company has negotiated a credit facility with the following terms:
-$5,000,000 line of credit -$3,000,000 average borrowing -30 basis point commitment fee on unused portion of line -Interest rate on advances is 1-month LIBOR plus 4% -1-month LIBOR is currently 2% -Compensating balance requirement of 20% on the outstanding borrowings
What is the effective annual borrowing rate for the line of credit?

Question202: 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?

Question203: The "agency problem" refers to:

Question204: A treasurer overhears several employees talking about selling their company stock before a pending deal impacts the stock negatively. What action should the treasurer take to control this behavior in the future?

Question205: In order to increase liquidity, ABC Motor Company bundled its customers' installment payments and resold them to other investors. This is known as:

Question206: All of the following are examples of treasury management system transactions for liquidity management EXCEPT:

Question207: 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:

Question208: When estimating the cost of capital, which of the following financial resources would probably NOT be included in the cost of capital calculation?

Question209: BF Company, a manufacturer of food products, reported financial information shown in the Exhibit for the end of the year. BF Company is subject to covenants in its commercial paper program. It is in compliance with which of the following?

Question210: Which of the following options would be BEST suited for a firm that wishes to pay no premium?

Question211: An investment is purchased for $10,000.00 that offers compounding of the first year's interest and it matures at the end of year two. If the value at maturity is $11,664.00, what is the rate of return on the investment?

Question212: What is the primary weakness of a risk management policy that includes risk control without specifically providing a plan for risk financing?

Question213: On a daily basis, the cash manager is responsible for all of the following EXCEPT:

Question214: The main objective of a company's international cash management function is to:

Question215: If a company does not have cash available to make an interest payment on a bond, the company is experiencing difficulty with its:

Question216: XYZ Company is considering the purchase of a security that generates a tax equivalent yield of 10% and a tax exempt yield of 7.1%. What is XYZ's marginal investment tax rate?

Question217: Which of the following types of payments would NOT be included in cash flow forecasting?

Question218: The executive management of a utility company would like to determine if it would be more cost effective to hire a third-party provider to handle its bill processing functions, which are currently internally operated. What formal selection method should the company use to obtain proposed solutions and detailed pricing from potential vendors?

Question219: XYZ Company is considering selling treasury stock but is concerned about the amount of capital it will raise given the current high volatility of the stock market. What is the BEST strategy a firm can employ to reduce its uncertainty?

Question220: The controller is developing a financial plan that includes an operating budget and a financial budget. Which of the following statements is true?

Question221: Liquidity reserves for opportunistic requirements are typically maintained in the form of:

Question222: 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:

Question223: 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?

Question224: When a paper check is converted to an electronic form:

Question225: 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?

Question226: One of the KEY risks associated with a company's use of financial institutions is the possibility that:

Question227: A multinational company may use which of the following to locate profits in subsidiaries in low-tax countries?

Question228: A company has large, ongoing short-term financing requirements with a maximum horizon of 250 days. It has a good credit rating and would like to use the least expensive source of short-term debt to finance its needs. The Treasurer might recommend which of the following?

Question229: What is a KEY reason that both a lessee and a lessor would enter into a lease financing agreement?

Question230: Financial risk management requires monitoring changes in which of the following?
I. Interest rates
II. Foreign exchange rates
III. Commodity prices
IV.
Cost of insurance

Question231: Which of the following ASC X12 transactions is used to confirm the receipt and compliance of transmitted sets?

Question232: An evaluated receipts settlement would be MOST commonly used in an environment where:

Question233: Which of the following is one of the PRIMARY considerations when establishing treasury policies and procedures?

Question234: A privately held company is planning to issue an IPO. If the company decides to do so, which of the following will MOST LIKELY result?

Question235: In a large company, the person who normally oversees both the treasury and the accounting functions is the:

Question236: 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 surplus cash in its latest fiscal year. What bank service should the analyst use to maximize the company's surplus cash?

Question237: 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?

Question238: All treasury policies should be approved by:

Question239: 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?

Question240: The process by which a bank or insurance company guarantees the debt obligation of a borrower is referred to as credit:

Question241: 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?

Question242: A bank uses all of the following to determine whether a company's balances are sufficient to compensate for services EXCEPT:

Question243: An employee is considering two investment strategies for his 401(k) plan:
Strategy #1: Invest all contributions in a money market fund that has returned 5% annually
Strategy #2: Invest all contributions in a stock fund that has returned 9% on average, although annual returns have varied between (2%) and 12%
Assuming that the employee makes a one-time investment of $12,000 and that both strategies continue to perform as they have historically, how much more or less could the stock fund be worth after one year compared to the money market fund?

Question244: Which of the following are examples of covenants in loan agreements?
I.Financial ratios II.Corporate resolutions III.Borrower limitations IV.Borrower obligations

Question245: From a buyer's perspective, which of the following types of float would be eliminated if checks were replaced by electronic payment methods?

Question246: A distribution business has used several bank loans to finance its expansion plans. After a fire destroyed the company's facility and inventory, it went out of business due to the loss of revenue during the month it was closed. What type of insurance coverage should the company have had to prevent its demise?

Question247: Which of the following will directly increase a company's cost in a fee-only bank relationship?

Question248: A diversified industrial company operates multiple remote manufacturing facilities that manage local supplier relationships. The company draws on a single line of credit for all of its working capital needs. Which of the following types of disbursement systems would BEST meet this company's needs?

Question249: Components of a field banking system include which of the following?
I. Local bank
II. Concentration bank
III.
Lockbox bank

Question250: With the advent of the euro, many U.S. companies have seen a reduction in their number of foreign currency transactions. As a result, these U.S. companies have benefited from which of the following?
I) Reduced FX transaction costs
II) Consolidated banking relationships
III) Simplified exchange risk management
IV) Reduced need to monitor foreign political climates

Question251: The first step in the financial institution and financial services provider (FSP) selection process should be:

Question252: A small import/export company, XYZ Company, has recently set up an account with a German firm. The contract between the companies states that XYZ is to be paid as soon as all documents are in order showing that the transaction terms have been met. Which of the following forms of payment drafts would be MOST appropriate for XYZ?

Question253:
Which currency will sell at the greatest discount in the forward market against the U.S. dollar?

Question254: A cash manager should use which of the following techniques to measure the differences among cash flows with different timings and amounts?

Question255: Banks often control information flow, records and assets, therefore it is critical that banks have:

Question256: Which of the following is NOT true for both bankers' acceptances and trade acceptances?

Question257: In a private label financing arrangement, the seller does which of the following?

Question258: A company has selected a specific project for investment. If the weighted average cost of capital (WACC) used to evaluate the project results in a negative net present value (NPV), which of the following will occur?

Question259: Company XYZ is not sure which direction interest rates are headed. Which of the following would be MOST suitable?

Question260: 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?

Question261: A prearranged ACH payment normally includes which of the following?
I) A fixed payment amount
II) A provision for immediate availability
III) A predetermined payment date

Question262: A main characteristic of a company with regional offices using a centralized treasury function is:

Question263: An increasing number of multinational companies have adopted formal multilateral netting systems for which of the following reasons?

Question264: The U.S. Congress establishedthe.

Question265: In a maturity matching financing strategy, which of the following is financed using short-term sources?

Question266: A large U.S. company is planning to fund its Canadian subsidiary. Currently, the Canadian dollar is trading at CAD 1.25 per U.S. dollar, and the U.S. dollar is expected to depreciate in the near term. To manage this FX exposure, what technique should the company implement?

Question267: A company is evaluating its employee healthcare expense and payroll applications. If the company wishes to provide maximum convenience to its employees, which payment method is the BEST choice?

Question268: The time from the deposit of a check in a bank account until the funds can be used by the payee is known as:

Question269: 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?

Question270: ABC company has a significant number of customers who are mainly consumers making monthly installment payments. Which one of the following types of lockbox would be the MOST appropriate for ABC to use?

Question271: A seller's cost of capital is 12%. The average credit sale is $200,000, and the credit terms are 2/10, net 30. What is the present value of receiving full payment on day 30?

Question272: A financially sound company sends wires to investors in the morning but does not receive replacement funds until the afternoon. Which facility will the company MOST LIKELY arrange with its bank to facilitate the company's wire payment activities on any given day?

Question273: Under the standards of corporate governance adopted in 2002, an independent director must:

Question274: The U.S. government agency that administers and enforces trade sanctions against targeted foreign countries is the:

Question275: Merchant MNO's sales for the day total $20,000. Fifty percent are credit cards, split between Card Red and Card Blue respectively, at 65% and 35% of the card volume. The average ticket is $50. Fees paid are 2% for Card Red and 2.5% for Card Blue and a fee of $0.05 per transaction. What are the fees that MNO will pay to the issuing banks?

Question276: A company has asked its marketing, payroll and sales teams to collaborate in finding a solution that could augment its customer base, reduce payroll cost and increase sales. The solution has to be market ready. Which of the following will serve all 3 purposes?

Question277: Kahuna Boards Co. has just experienced a very profitable year and wants to share the success with its shareholders. In order to pay dividends, a sequence of events must occur. Which of the following chronological sequence of events is correct?
1.Stock is sold without the upcoming dividend attached.
2.Dividend is paid.
3.Board of directors announces the dividend.
4.Holders of record are specified.

Question278: Which of the following is considered an important factor when selecting a financial service provider?

Question279: Which of the following are KEY issues to be considered when establishing a shared service center (SSC)?
I. Selecting the location
II. Comparing an SSC structure to outsourcing of a process
III. Choosing and implementing the technology for SSC
IV.
Choosing the collection bank