AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 131:

  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?

  A. Economic exposure
  B. Commodity exposure
  C. Transaction exposure
  D. Translation exposure
  C. Transaction exposure

• Question 132:

  A U.S. company has a secured committed line of credit of $5 million. The company successfully transmitted a $5.5 million wire transfer instruction out to the bank. The bank contacted the company and informed it that the wire transfer would not be processed. What is the MOST LIKELY reason the bank gave the company?

  A. The company overdraft facility was sufficient.
  B. The bank imposed a guidance line of credit on the account.
  C. The company reached its maximum limit on the committed line.
  D. The bank refused funding on the company's discretionary line of credit.
  B. The bank imposed a guidance line of credit on the account.

• Question 133:

  A treasurer has been advised that his privately held company has just lost its largest customer, which will have a significant impact on earnings. The treasurer applies an aggressive working capital strategy. Presently, the yield curve is upward sloping. Given this information, the treasurer should ensure that the company has:

  A. short-term non-committed lines.
  B. short-term committed lines.
  C. long-term non-committed lines.
  D. long-term committed lines.
  B. short-term committed lines.

• Question 134:

  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
  A. Ex-dividend date

• Question 135:

  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:

  A. single payment note.
  B. material payment note.
  C. balloon payment note.
  D. commercial note.
  A. single payment note.

• Question 136:

  What kind of budget forecasts the cost for investing activities?

  A. Operating budget
  B. Sales budget
  C. Maintenance budget
  D. Capital budget
  D. Capital budget

• Question 137:

  XYZ Company is a net borrower. Its cost of funds is 5.0%, its earnings credit rate is 3.0%, and the reserve requirement is 10%. Average service fees are $50,000 per month. Its average ledger balance is $2,000,000, and its average collected balance is $1,000,000. What are the collected balances required to pay for services during a 30-day month?

  A. $12,166,667
  B. $13,518,519
  C. $20,277,778
  D. $22,530,864
  D. $22,530,864

• Question 138:

  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?

  A. Economic value added
  B. Net present value
  C. Residual income
  D. Free cash flow
  D. Free cash flow

• Question 139:

  A manufacturing company is working to improve its cash conversion cycle. Factory production has increased over the last year to increase inventory levels. They have an inventory turnover of 3.1 and asset turnover of 5.0. The company has a days' payable of 30 and a days' receivable of60. It has started enforcing its net 30 terms and placed customers with balances outstanding more than 45 days on credit hold. As a result, the company collected receivables quicker but it suffered a 10% loss in sales. What can the company do to reduce its cash conversion cycle?

  A. Pay vendors in advance.
  B. Decrease the days' payable.
  C. Extend payables deferral period.
  D. Revise credit policy to be more lenient.
  C. Extend payables deferral period.

• Question 140:

  A publicly-traded U.S. company has a German subsidiary which has accumulated significant cash balances. The company needs to pay its quarterly dividend but lacks the funds to make the payment. What is its BEST alternative for obtaining the funds?

  A. Sell additional shares through a secondary offering.
  B. Declare a one-time intercompany dividend.
  C. Obtain private equity funding.
  D. Sign a short-term intercompany loan with the subsidiary.
  D. Sign a short-term intercompany loan with the subsidiary.