AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 151:

  A wholesale lockbox system does which of the following?

  A. Relies on high speed automation
  B. Provides information about invoices
  C. Processes small dollar remittances
  D. Requires standard scannable documents
  B. Provides information about invoices

• Question 152:

  What is the Weighted Average Cost of Capital for XYZ Company, assuming the following:

  The pre-tax cost of long term debt is 8%

  The cost of equity is 11%

  The marginal tax rate is 33%

  Total liabilities = $75,000

  Long term debt = $50,000

  Owners equity = $75,000

  A. 7.2%
  B. 7.8%
  C. 8.7%
  D. 12.4%
  C. 8.7%

• Question 153:

  Which of the following is a characteristic of MOST mutual funds?

  A. Shares are primarily held by corporations and pension funds.
  B. The value of shares fluctuates with the performance of underlying securities.
  C. Funds are insured by the FDIC.
  D. Shares may be traded on the NYSE.
  B. The value of shares fluctuates with the performance of underlying securities.

• Question 154:

  One reason for charging management fees to subsidiaries is to:

  A. justify to local governments the flow of funds to the parent company.
  B. mitigate shareholder concerns about the large investments needed for overseas ventures.
  C. minimize the impact of call provisions generally associated with overseas investing.
  D. help reduce the variability of parent and subsidiary future cash flow.
  A. justify to local governments the flow of funds to the parent company.

• Question 155:

  Which of the following is a KEY objective when instituting a collection and concentration policy?

  A. Cost efficiency
  B. Performance measurement
  C. Regulatory and legal considerations
  D. Establishing approved collection practices
  A. Cost efficiency

• Question 156:

  The board of directors announces an increase in its dividend from $0.11/share to $0.15/share. Over the next two quarters, management notices that its investor base has shifted to include a large percentage of pension funds and endowment funds. This is the result of:

  A. the clientele effect.
  B. the ex-dividend date.
  C. the dividend reinvestment plan.
  D. dividend capture.
  A. the clientele effect.

• Question 157:

  Which function involves evaluating alternative projects in relation to one another and in relation to the company's cost structure?

  A. Capital budgeting
  B. Corporate forecasting
  C. Financial planning
  D. Financial risk management
  A. Capital budgeting

• Question 158:

  Company A purchases materials on cash-before-delivery terms, while Company B uses paid-on-production terms. Both companies are diligent with the protection of assets, but Company B has concerns with respect to transfer of title of the materials. Company B is MOST LIKELY what type of business?

  A. Manufacturer
  B. Retailer
  C. Supplier
  D. Wholesaler
  A. Manufacturer

• Question 159:

  A company purchases a machine tool with an expected life of 3 years. Under the accrual accounting method, the equipment would be treated in which of the following ways?

  A. As an asset, recorded on the balance sheet at acquisition cost and depreciated
  B. As an asset, recorded on the balance sheet at purchase price and amortized
  C. As a purchase, netted against retained earnings
  D. As a purchase, recorded as an operating expense in the current period
  A. As an asset, recorded on the balance sheet at acquisition cost and depreciated

• Question 160:

  An employee is considering two investment strategies for his 401(k) plan:

  Strategy #1: Invest all contributions in a money market fund that has returned 5% annually

  Strategy #2: Invest all contributions in a stock fund that has returned 9% on average, although annual returns have varied between (2%) and 12%

  Assuming that the employee makes a one-time investment of $12,000 and that both strategies continue to perform as they have historically, how much more or less could the stock fund be worth after one year compared to the money market

  fund?

  A. Between ($480) and $480
  B. Between ($840) and $840
  C. Between ($1,080) and $1,080
  D. Between ($1,680) and $1,680
  B. Between ($840) and $840