AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 121:

  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. Currency swap
  C. Interest-rate swap
  D. Currency future
  B. Currency swap

• Question 122:

  A town has $25 million excess funds to invest long term. The town's investment policy requires it have full FDIC coverage on all investments. The town is willing to do its own due diligence on the financial institutions that they invest in, but would prefer to have one statement. Which of the following investment options meets its requirements?

  A. Certificate of Deposit Account Registry Service
  B. Separately managed diversified portfolio
  C. Institutional Money Market Account
  D. Jumbo Certificates of Deposit
  A. Certificate of Deposit Account Registry Service

• Question 123:

  The MOST important tool the Federal Reserve Board has for influencing the amount of reserves in the banking system is:

  A. meetings of the Reserve Board of Governors.
  B. open market operations by the New York Federal Reserve.
  C. term limits for the Federal Reserve Governors.
  D. accepting tax payments on behalf of the IRS.
  B. open market operations by the New York Federal Reserve.

• Question 124:

  PFA Corporation has used regression analysis based on historical data to determine the estimated portion of dollars of checks issued that will clear on any given business day.

  

  If PFA issued $150,000 in checks and $7,500 worth of checks cleared on day 5, what value of checks will be estimated to clear on day 4?

  A. $7,500
  B. $15,000
  C. $22,500
  D. $30,000
  B. $15,000

• Question 125:

  Which of the following capital budgeting methods ignores the time value of money?

  A. Payback period
  B. Profitability Index
  C. Net Present Value
  D. Internal Rate of Return
  A. Payback period

• Question 126:

  A U.S. exporter sells goods to a foreign buyer in U.S. dollars and wants to guarantee that payment is made by the buyer. The exporter would MOST LIKELY require a(n):

  A. bankers' acceptance.
  B. documentary collection.
  C. letter of credit.
  D. open account.
  C. letter of credit.

• Question 127:

  A retail chain with 500 locations throughout the United States would use which of the following systems?

  A. Over-the-counter collections in numerous locations; deposits to field banks
  B. A company processing center; deposits to nearby bank(s)
  C. A wholesale lockbox with multiple deposit points
  D. A retail lockbox with multiple deposit points
  A. Over-the-counter collections in numerous locations; deposits to field banks

• Question 128:

  In which of the following international cash management methods is title for goods transferred for intercompany sales?

  A. Pooling
  B. Internal factoring
  C. Multilateral netting
  D. Re-invoicing
  D. Re-invoicing

• Question 129:

  A company employs several short-term credit facilities at any one time to meet its liquidity needs and has consistently demonstrated the ability to service this debt as required. However, because of a temporary breach of a financial covenant of one agreement, all of the company's credit facilities were declared in default. All the credit agreements must have had which of the following types of clause?

  A. Material adverse change
  B. Technical default
  C. Cross-default
  D. Discretionary
  C. Cross-default

• Question 130:

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

  A. The financial budget is used to determine the operating activity level the company can support.
  B. The two budgets do not have any impact on each other.
  C. The operating budget is developed to determine the staffing level needed for operations.
  D. The financial budget is impacted by the company's sources and uses of cash.
  D. The financial budget is impacted by the company's sources and uses of cash.