AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 51:

  The rate of interest commercial banks charge their best credit rated customers is called the:

  A. discount rate.
  B. call rate.
  C. prime rate.
  D. real interest rate.
  C. prime rate.

• Question 52:

  In the event of bankruptcy and the subsequent liquidation of issuer's debt, in what order, from first to last, will the following be repaid? 1.Senior secured debt 2.Senior subordinated debt 3.Junior secured debt 4.Junior debentures

  A. 1, 2, 3, 4
  B. 1, 3, 2, 4
  C. 2, 1, 3, 4
  D. 2, 1, 4, 3
  B. 1, 3, 2, 4

• Question 53:

  Which of the following will exempt commercial paper from SEC registration?

  I. A maturity of fewer than 270 days

  II. A rating grade of A-1 or P-1

  III. Distribution through a licensed dealer

  IV.

  Backing by a U.S. bank letter of credit

  A. I only
  B. IV only
  C. I and II only
  D. II, III, and IV only
  I. A maturity of fewer than 270 days II. A rating grade of A-1 or P-1 III. Distribution through a licensed dealer IV. Backing by a U.S. bank letter of credit
  A. I only

• Question 54:

  When a subsidiary borrows money, the parent, sister subsidiary, or other entity is often used in order to:

  A. diversify the risk of the investment.
  B. guarantee the obligations of the borrower.
  C. increase the return of a security.
  D. prevent a covenant violation.
  B. guarantee the obligations of the borrower.

• Question 55:

  A-Plus Company has made arrangements for a new insurance broker to provide products to its employees. Historically, A-Plus Company's employees made insurance payments via payroll deduction, but the new broker will be collecting payments from employees directly. What will the broker MOST LIKELY use to minimize collection float?

  A. ARC
  B. CCD
  C. PPD
  D. RCK
  C. PPD

• Question 56:

  A farmer who plans to sell his/her corn crop in three months would benefit MOST from which of the following?

  A. A long futures contract and falling prices
  B. A long futures contract and steady prices
  C. A short futures contract and rising prices
  D. A short futures contract and falling prices
  D. A short futures contract and falling prices

• Question 57:

  Company J is looking to perform an A/R cash analysis based on the following sales information:

  

  60% of sales are collected within two months after sale. After three months, $135,000 of January's sales were collected. What was the dollar amount of January's sales collected in April?

  A. $15,000
  B. $45,000
  C. $90,000
  D. $135,000
  B. $45,000

• Question 58:

  Company A regularly modifies its capital structure by repurchasing stock. Which one of the following is a true statement?

  A. Investors may feel that management is manipulating the stock price.
  B. Stock repurchases are not an attractive alternative to dividend payments.
  C. Partial disclosure to the SEC is required for repurchases.
  D. Stock repurchases do not offer tax deferral advantages over dividends.
  A. Investors may feel that management is manipulating the stock price.

• Question 59:

  Which of the following is considered an important factor when selecting a financial service provider?

  A. CAMELS score
  B. Expertise of bank personnel
  C. Country of origin
  D. Timely response to the RFP
  B. Expertise of bank personnel

• Question 60:

  A multinational company (MNC) that operates a shared service center charges its foreign subsidiaries a management fee. This management fee may need to be:

  A. manipulated to locate profits in low-tax countries.
  B. paid through a third-party intermediary.
  C. negotiated with the host government.
  D. significantly taxed by the host government.
  C. negotiated with the host government.