Free AFP (CTP) Certification Sample Questions with Online Practice Test
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NEW QUESTION # 453
The treasury manager of an auto-parts manufacturer has noticed that checks were sent to a foreign individual not on the approved vendor list. The payables manager has explained the payments but did not provide an invoice. The treasury manager did no further research and is later disciplined for:
- A. ignoring International Accounting Standards Board regulations.
- B. not implementing "Check 21."
- C. not reporting suspicious activity under the USA Patriot Act.
- D. not purchasing enough surety insurance.
Answer: C
NEW QUESTION # 454
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?
- A. Re-invoicing
- B. Leading
- C. Lagging
- D. Multicurrency accounts
Answer: B
NEW QUESTION # 455
A company is looking for a way to finance their inventory. What is the BEST funding match?
- A. Stock split
- B. Equity issuance
- C. Long-term private placement
- D. Short-term debt
Answer: D
NEW QUESTION # 456
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. 15.25%
- C. 14.47%
- D. 16.53%
Answer: C
NEW QUESTION # 457
A lender is evaluating the creditworthiness of a company that has high levels of operating leverage. In determining the debt capacity of the company, the bank would MOST LIKELY prefer
a:
- A. high total liabilities to total assets ratio.
- B. low times interest earned ratio.
- C. high debt to tangible net worth ratio.
- D. low long-term debt to capital ratio.
Answer: D
NEW QUESTION # 458
A multinational company owns a United Kingdom subsidiary that has total assets equal to GBP1 million and intercompany loans due to the parent company equal to $1 million. It would like to undertake a balance sheet hedge of the U.K. subsidiary's GBP liability because it expects a depreciation of the pound. Given these circumstances, which of the following actions would be appropriate?
- A. Borrow USD from a U.K. bank to repay the intercompany dollar debt.
- B. Exchange rates are fixed and thus no losses should occur.
- C. Borrow GBP from a U.K. bank to repay the intercompany dollar debt.
- D. Take no action because exchange rates cannot be predicted.
Answer: C
NEW QUESTION # 459
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. Fair Debt Collection Practices Act (1978)
- B. Fair Credit Billing Act (1975)
- C. Glass-Steagall Act (1933)
- D. Robinson-Patman Act (1936)
Answer: D
NEW QUESTION # 460
A multinational corporation (MNC) moving all of its Mexican peso-denominated revenues into a lower tax-rate jurisdiction could adopt any of the following treasury practices EXCEPT:
- A. licensing fees to subsidiaries.
- B. an in-house bank.
- C. a notional pooling program.
- D. a shared service center.
Answer: C
NEW QUESTION # 461
Which of the following contributes MOST to the marketability of a security?
- A. An investment-grade rating
- B. An irrevocable letter of credit guarantee
- C. A return at or above the yield curve
- D. A large, active secondary market
Answer: D
NEW QUESTION # 462
A-Plus Company has made arrangements for a new insurance broker to provide products to its employees. Historically, A-Plus Company's employees made insurance payments via payroll deduction, but the new broker will be collecting payments from employees directly. What will the broker MOST LIKELY use to minimize collection float?
- A. ARC
- B. RCK
- C. PPD
- D. CCD
Answer: C
NEW QUESTION # 463
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:
- A. exposure avoidance.
- B. consequential damages.
- C. indemnification.
- D. capacity error.
Answer: A
NEW QUESTION # 464
An investor purchases securities that mature beyond the date when cash is required. The investor intends to sell the investment to meet the cash flow need. This strategy works best when:
- A. the yield curve is inverted.
- B. short term rates are lower than long term rates.
- C. interest rates are increasing substantially.
- D. investment prices are falling.
Answer: B
NEW QUESTION # 465
For newly issued debt, a company's effective cost of debt is a function of yield to maturity and:
- A. the maturity date of the debt instrument.
- B. the credit rating of the company.
- C. the marginal tax rate of the company.
- D. the price of the debt instrument.
Answer: C
NEW QUESTION # 466
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. $1,748,473
- B. $126,744
- C. $434,706
- D. $(251,527)
Answer: B
NEW QUESTION # 467
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. Documentation validation
- B. Comparison validation
- C. Ongoing validation
- D. In-sample validation
Answer: D
NEW QUESTION # 468
The Treasurer of a publicly-traded U.S. company discovers several large payments which were made from the company's disbursement account without proper approval. These unauthorized payments represent an exposure to penalties imposed by which regulator?
- A. The Public Company Accounting Oversight Board
- B. The Office of the Comptroller of the Currency
- C. The Financial Industry Regulatory Authority
- D. The Office of Foreign Assets Control
Answer: A
NEW QUESTION # 469
A cash manager invests in Treasury bills for which of the following reasons?
- A. There is no price risk.
- B. The interest earned is exempt from federal taxes.
- C. They are extremely liquid.
- D. They offer the highest yield for overnight investing.
Answer: C
NEW QUESTION # 470
A put option on a company's stock has an exercise price of $20. On the delivery date, the stock is trading at $24 per share. What should the investor who has paid $2 for the option do?
- A. Not exercise the option and lose $2.
- B. Not exercise the option and lose $6.
- C. Exercise the option and gain $4.
- D. Exercise the option and gain $2.
Answer: A
NEW QUESTION # 471
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