AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 391:

  An inverted yield curve occurs when which of the following is true?

  A. As rates on current issues rise, the price of existing issues falls.
  B. In anticipation of lower long-term rates, investors push short-term rates down.
  C. The longer the maturity of the investment, the greater the risk of a price decline.
  D. The longer the maturity of the investment, the lower the rate of return.
  D. The longer the maturity of the investment, the lower the rate of return.

• Question 392:

  To monitor financial institution service quality, a company would use all of the following measures EXCEPT:

  A. report cards.
  B. an earnings allowance rate.
  C. annual senior management reviews.
  D. informal reviews on day-to-day relationship management.
  B. an earnings allowance rate.

• Question 393:

  The MOST common way that companies structure their treasury operations is as a:

  A. cost center.
  B. profit center.
  C. shared service center.
  D. in-house bank.
  A. cost center.

• Question 394:

  A cash manager at a U.S. retailer forecasts a positive collected cash position for the end of the current day. The company has an overdraft facility at 10%, a separate investment account earning 8% before taxes, an earnings credit rate of 8% and an outstanding single payment note at9.5% maturing in 1 week. This month's bank service fees are expected to exceed the earnings credit. Which of the following options would be the MOST economically positive for the company?

  A. Leave the funds in the account.
  B. Redeem the single payment note.
  C. Prepay administrative expenses.
  D. Transfer funds to the investment account.
  A. Leave the funds in the account.

• Question 395:

  An L/C in favor of a U.S. exporter is issued by a bank in an emerging-market country, and it is confirmed by the exporter's bank. What risk is reduced for the U.S. exporter?

  A. Credit risk
  B. Currency risk
  C. Re-investment risk
  D. Valuation risk
  A. Credit risk

• Question 396:

  A regional physicians' group is looking for an alternative to liability insurance to help protect against potential future liability claims. Which method would BEST serve its need to protect against catastrophic losses?

  A. Casualty insurance
  B. A risk retention group
  C. Non-insurance
  D. Self-insurance
  B. A risk retention group

• Question 397:

  What do MOST companies try to maintain due to the signaling effect and clientele effect?

  A. A stable policy of retained earnings
  B. A stable dividend policy
  C. A consistent payment date
  D. A dividend reinvestment plan
  B. A stable dividend policy

• Question 398:

  A U.S. company's pension plan is managed by an investment management firm, headquartered outside the United States. The investment management firm outsources the accounting for the plan to an organization on the Office of Foreign Assets Control (OFAC) sanctions lists and the firm does not advise the U.S. company of this fact. A financial loss in the pension plan is later realized due to the mismanagement of funds. When establishing its contract with the firm to protect itself from losses in the pension plan, the company should have:

  A. identified the exception management process.
  B. included a limitation of liability clause in the contract.
  C. referred to the Foreign Corrupt Practices Act in the contract.
  D. specified what constitutes other-than-temporary-impairment for the investments.
  B. included a limitation of liability clause in the contract.

• Question 399:

  Company ABC has expanded its banking relationships due to international growth. ABC cannot figure out why its collection float amongst its international customers is longer than its domestic customers. Additionally, ABC is incurring significant costs related to the receipt and processing of these customer payments. ABC is MOST LIKELY experiencing issues related to:

  A. SEPA credit transfer.
  B. international wire transfer.
  C. international bank consolidations.
  D. paper-based international payments.
  D. paper-based international payments.

• Question 400:

  A currency swap is BEST described as an:

  A. immediate exchange of bank drafts.
  B. agreement to convert an obligation in one currency to another.
  C. agreement to deliver or purchase a currency in two days.
  D. option traded on a recognized exchange.
  B. agreement to convert an obligation in one currency to another.