AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 611:

  Which of the following is an example of a passive investment strategy?

  A. Riding the yield curve
  B. Investing in overnight repurchase agreements
  C. Utilizing a dividend capture program
  D. Purchasing an interest rate swap
  B. Investing in overnight repurchase agreements

• Question 612:

  The Treasurer at ABC Company currently uses an in-house company-processing lockbox center. The Treasurer has asked for an analysis to determine the major advantage of using a traditional check/mail-based lockbox system. ABC receives 287,000 payments per month and hired seven additional staff members to process the payments in-house. Additionally, $389,000 was invested in the equipment used to process the payments and NSF checks have decreased 7% since using the in-house center. The equipment's current market value is equal to its book value. What major advantage should the analysis indicate?

  A. Net income will improve.
  B. Availability float will be reduced.
  C. The equipment can be sold at no loss.
  D. NSF checks will continue to decrease.
  B. Availability float will be reduced.

• Question 613:

  The accounting requirement that a product's selling costs be recorded in the same period as the product's revenue is recorded, regardless of when the cash is paid, is an example of the:

  A. full disclosure principle.
  B. historical cost principle.
  C. matching principle.
  D. revenue recognition principle.
  C. matching principle.

• Question 614:

  An asset-based lender has decided to provide a loan to a company. In order to perfect its security interest in the assets used as collateral with the potential borrower, the lender will be MOST interested in reviewing which of the following?

  A. Book value of inventory
  B. Delinquency payment record
  C. Lien search findings
  D. Age of receivables
  C. Lien search findings

• Question 615:

  A company has negotiated a credit facility with the following terms:

  $5,000,000 line of credit $3,000,000 average borrowing 30 basis point commitment fee on unused portion of line Interest rate on advances is 1-month LIBOR plus 4% 1-month LIBOR is currently 2% Compensating balance requirement of 20% on the outstanding borrowings

  What is the effective annual borrowing rate for the line of credit?

  A. 6.0%
  B. 6.2%
  C. 7.8%
  D. 9.3%
  C. 7.8%

• Question 616:

  A put option is out of the money when the asset price:

  A. is less than the strike price.
  B. exceeds the strike price.
  C. is unchanged relative to the purchase price.
  D. is equal to the strike price.
  B. exceeds the strike price.

• Question 617:

  Which of the following services allows a bank to match checks presented for payment against company check issuance data?

  A. Payor bank services
  B. Check inquiry
  C. Positive pay
  D. High-order prefix
  C. Positive pay

• Question 618:

  Amalgamated Binding Consolidators takes 20 days to convert its raw materials to finished goods, 5 days to sell it, and 15 days to collect its credit sales. What is the company's days receivable period?

  A. 5 days
  B. 15 days
  C. 20 days
  D. 40 days
  B. 15 days

• Question 619:

  Which of the following is MOST LIKELY to have a significant impact on the financial condition of an organization?

  A. Defined benefit pension plans
  B. Defined contribution pension plans
  C. 401(k) plans
  D. Tax-deferred annuities
  A. Defined benefit pension plans

• Question 620:

  A commercial paper issuer who repays investors earlier in the day than it receives funds from new investors often creates which of the following?

  A. Collected overdraft
  B. Daylight overdraft
  C. Disbursement float
  D. Dual balances
  B. Daylight overdraft