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NEW QUESTION 501
To increase the money supply, the Federal Reserve would increase which of the following?
- A. The discount rate
- B. The reserve requirement
- C. The purchase of open market securities
- D. The federal funds interest rate
Answer: C
NEW QUESTION 502
"Fees" in Country Y, which would be considered bribes in the United States, are ingrained in the commercial culture. A U.S. company doing business in Country Y:
- A. may pay the "fee" in Country Y but cannot take an IRS tax deduction.
- B. may have moral but not legal issues with paying "fees" in Country Y.
- C. is prohibited by U.S. law from paying "fees" in Country Y.
- D. may receive an IRS tax credit for "fees" paid in Country Y.
Answer: C
NEW QUESTION 503
A U.S. firm acquires a large U.K. manufacturer that generates high levels of cash flow in its local currency. The purchase is denominated in British pounds and is financed through the issuance of 10-year, 7.5% U.S. dollar bonds. The U.S. firm will rely entirely on the U.K. manufacturer's cash flows to fund the interest payments on the bonds. What derivative instrument would help the U.S. firm manage its FX exposure?
- A. Currency forward
- B. Interest-rate swap
- C. Currency future
- D. Currency swap
Answer: D
NEW QUESTION 504
Which of the following statements is true about a forward foreign exchange contract?
- A. It does not require an underlying commercial transaction because the contract trades on its own.
- B. It specifies delivery of currencies at an exchange rate established today for a currency transaction that settles more than two days in the future.
- C. It is a right to buy or sell foreign currency at a specified price within a fixed time period.
- D. It is an exchange of currencies at the outset of a transaction at a fixed rate determined by the spot markets.
Answer: B
NEW QUESTION 505
Future treasury operations will be affected MOST significantly by consolidation of which of the following?
- A. Commercial banking industry
- B. Competitors
- C. Subsidiaries
- D. Procurement cards
Answer: A
NEW QUESTION 506
A deck furniture supply company maintains a large inventory during the summer sales season. One of the PRIMARY benefits of this approach is that the company avoids which of the following costs?
- A. Order
- B. Holding
- C. Stock-out
- D. Opportunity
Answer: C
NEW QUESTION 507
Components of a field banking system include which of the following?
I) Local bank
II) Concentration bank
III) Lockbox bank
- A. I and II only
- B. I, II, and III
- C. I only
- D. II and III only
Answer: A
NEW QUESTION 508
Which of the following would be considered insurance risk management services?
- A. IT professionals who ensure the treasury workstation properly converts FX
- B. Information-system consultants who upgrade loss controls
- C. External auditors who are hired to review financial statements
- D. Risk group that recommends the CFO approve SOX 404 compliance
Answer: B
NEW QUESTION 509
Fluctuations in interest rates and the availability of funds are more significant risks for companies that rely on:
- A. short-term borrowing for short-term uses.
- B. long-term borrowing for short-term uses.
- C. long-term borrowing for long-term uses.
- D. short-term borrowing for long-term uses.
Answer: D
NEW QUESTION 510
All of the following bank products and services can simplify the preparation of the daily cash position EXCEPT:
- A. controlled disbursement.
- B. balance reporting.
- C. ACH concentration.
- D. account analysis.
Answer: D
NEW QUESTION 511
Check MICR line information includes which of the following?
I.Bank of deposit identification number II.Payee bank identification number III.Federal Reserve bank code IV.Payor's account number
- A. II, III, and IV only
- B. I only
- C. III and IV only
- D. I, II, III, and IV
Answer: C
NEW QUESTION 512
A merchant presents 2 different batches of credit card transactions for processing, each batch has the same dollar value and number of transactions, but the fees are different. Which of the following explains why?
- A. Use of a different terminal
- B. Type of card accepted
- C. Time of batch closure
- D. Goods or services sold
Answer: B
NEW QUESTION 513
Sign Company and Paint Company have a twenty-year business relationship, and they work together when sending and receiving payments. Sign Company also does a large amount of business with Brush Company, a subsidiary of Paint Company. Brush Company's Treasurer recently received a memo from the Treasurer of Paint Company reminding it that when dealing with vendors, extensive information is required when receiving or making ACH payments. What ACH payment format are Sign Company and Paint Company MOST LIKELY to use?
- A. EBPP
- B. CCD+
- C. CTX
- D. CCD
Answer: C
NEW QUESTION 514
The historic rate of return in the U.S. stock market is 8%. An investment portfolio has a mix of equity investments consisting of 40% A-Corp stock, 30% K-Corp stock, 10% M-Corp stock and 20% W-Corp stock. The investment portfolio manager tends to buy and hold the equity investment position for 3 years on average. To calculate the required rate of return for this investment portfolio, what rate from the table would be used as the risk-free rate?
- A. 4.50%
- B. 3.30%
- C. 0.75%
- D. 0.10%
Answer: D
NEW QUESTION 515
XYZ Bank would like to conduct some foreign exchange transactions with JKL Bank. JKL isn't the most liquid and could have some credit risk. XYZ Bank should suggest which of the following in order to eliminate risk?
- A. Pre-authorized draft
- B. Straight-through processing
- C. Continuous Linked Settlement
- D. Forward rate contract
Answer: C
NEW QUESTION 516
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. Risk profile
- C. Confidentiality agreement
- D. Notional barrier
Answer: D
NEW QUESTION 517
Financial ratios may provide an inaccurate forecast of a company's performance because they are:
- A. sensitive to seasonal cash flows.
- B. based on snapshots of the company's activity.
- C. difficult to incorporate into statistical forecasting.
- D. economic rather than accounting values.
Answer: B
NEW QUESTION 518
A buyer receives an invoice from a supplier that offers discount terms of 3/10, net 60. What is the effective cost of discount?
- A. 22.58%
- B. 21.90%
- C. 15.64%
- D. 16.13%
Answer: A
NEW QUESTION 519
XYZ Company has decided to purchase a close competitor. This acquisition would make XYZ Company the 4th largest in its industry allowing it better purchasing power and greater distribution channels. After completing the M&A analysis, it is determined that the combined companies would produce a 40% increase in revenue, reduce manufacturing costs by 30%, but would increase current liabilities by 27%. Which of the following would keep the acquisition from happening?
- A. Increased weighted average cost of capital
- B. Negative net present value
- C. Restrictive bond covenants
- D. Low return on investment
Answer: C
NEW QUESTION 520
Company XYZ is a manufacturer of industrial equipment and has enjoyed a large percentage increase in profits from a small increase in revenues. Sales recently plummeted resulting in steep decline in profitability. Which of the following BEST describes the cost structure of the company?
- A. High operating leverage
- B. High financial leverage
- C. Low variable costs
- D. Low contribution margin
Answer: A
NEW QUESTION 521
A firm's air conditioning unit breaks down unexpectedly and must be replaced immediately. What type of liquidity requirement is this an example of?
- A. Transaction
- B. Speculative
- C. Precautionary
- D. Opportunity
Answer: C
NEW QUESTION 522
A sinking fund is primarily used for which of the following purposes?
- A. To pay bond administration costs
- B. To provide periodic principal reductions over the life of the bond
- C. To ensure that adequate funds are available to redeem the bond issue
- D. To provide interest distributions to bondholders
Answer: C
NEW QUESTION 523
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?
- A. Segregation of duties
- B. Audit committee governance
- C. Subcertification
- D. Signature on SEC Form 10-K
Answer: A
NEW QUESTION 524
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