CTP Certified Treasury Professional

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Question 1

An optimal concentration system minimizes all of the following EXCEPT:

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


Answer : B

Question 2

A bank issues a letter of credit (L/C) and receives a request for payment under the L/C.
The buyer notifies the issuing bank not to make payment because there is a dispute over
the quality of the merchandise. However, the documents received fully comply with the
terms of the L/C. Which of the following statements is true?

  • A. The buyer may immediately return the merchandise and cancel the L/C.
  • B. The bank may delay payment until reimbursed by the buyer.
  • C. The bank may delay payment, provided the seller is notified of the dispute within three business days.
  • D. The bank must make payment and is entitled to immediate reimbursement from the buyer.


Answer : D

Question 3

The KEY decision in using CCD+ and CTX formats for B2B payments is:

  • A. whether to keep the payment and remittance information together or separate.
  • B. whether to use the Internet or an EDI spoke to transmit electronic payments.
  • C. whether to use an EDI or a UN/EDIFACT protocol to transfer the value electronically.
  • D. whether an evaluated receipts or paid-on-production technique is being used for the transfer.


Answer : A

Question 4

Which one of the following ties a user’s private key to a user’s public key?

  • A. A digital signature
  • B. A digital certificate
  • C. A digitized signature
  • D. A digital token


Answer : B

Question 5

A French company conducts business strictly within the euro zone (the EMU). Which type
of risk is of LEAST concern?

  • A. Terrorist
  • B. Regulatory
  • C. Payment
  • D. Currency


Answer : D

Question 6

For a defined benefit plan,

  • A. plan assets equal plan liabilities.
  • B. plan assets can be less than plan liabilities.
  • C. plan assets are greater than plan equity.
  • D. plan assets always equal plan equity.


Answer : B

Question 7

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

  • A. allows the corporation to capture plan investment surpluses.
  • B. allows proxy voting in favor of management.
  • C. shifts investment shortfall risk to employees.
  • D. defines allowed investments within the plan.


Answer : C

Question 8

Which of the following is MOST LIKELY to have a significant impact on the financial
condition of an organization?

  • A. Defined benefit pension plans
  • B. Defined contribution pension plans
  • C. 401(k) plans
  • D. Tax-deferred annuities


Answer : A

Question 9

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.


Answer : A

Question 10

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

  • A. 9.9%
  • B. 10.3%
  • C. 10.5%
  • D. 10.8%


Answer : C

Question 11

The stock of a manufacturing company is priced so that its expected rate of return is below
its required rate, as calculated by the Capital Asset Pricing Model (CAPM). Which of the
following will occur in an efficient capital market?

  • A. Buying pressure for the firm’s stock will drive the price up.
  • B. Buying pressure for the firm’s stock will drive the price down.
  • C. Selling pressure for the firm’s stock will drive the price up.
  • D. Selling pressure for the firm’s stock will drive the price down.


Answer : D

Question 12

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?

  • A. Hire an investment banker to underwrite the stock on a full underwriting basis.
  • B. Hire an investment banker to issue the stock using a master registration statement.
  • C. Hire an investment banker to underwrite the stock with no flotation costs.
  • D. Hire an investment banker to underwrite the stock on a best efforts basis.


Answer : A

Question 13

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.


Answer : A

Question 14

An investor concerned about taxes on dividend distributions will MOST LIKELY purchase
stock on which of the following dates?

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


Answer : A

Question 15

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?

  • A. Declare a special dividend.
  • B. Reinvest cash into the company.
  • C. Declare a cash dividend.
  • D. Repurchase shares of outstanding stock.


Answer : D

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