AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 691:

  Company RST is a seasonal retailer who has just completed its holiday season and is temporarily flush with cash. The treasurer has identified approximately $15 million of excess balances and is trying to determine what to do with the surplus cash. Cash forecasts show that the funds will be needed in approximately 30 days to replenish inventory. Which of the following plans should the treasurer implement immediately?

  A. Leave the funds in RST's bank account earning an ECR of 1%.
  B. Purchase low-risk, short-term investments yielding 2%.
  C. Prepay a $15 million, 5% loan maturing in 1 year.
  D. Buy a long-term, highly rated investment paying 2.10%.
  B. Purchase low-risk, short-term investments yielding 2%.

• Question 692:

  All of the following are account reconciliation services EXCEPT:

  A. sort only.
  B. full reconciliation.
  C. payor bank services.
  D. positive pay services.
  C. payor bank services.

• Question 693:

  Simplifying upgrades and system restoration, access from multiple remote locations, and interfacing with multiple applications are all reasons to:

  A. replace workstations annually.
  B. use the internet.
  C. use 128-bit encryption.
  D. outsource IT.
  B. use the internet.

• Question 694:

  Which of the following must be considered when designing the basic framework for a cash management system?

  A. Industry standards and practices
  B. SEC regulations
  C. FASB rulings
  D. Public company listing guidelines
  A. Industry standards and practices

• Question 695:

  An optimal concentration system minimizes all of the following EXCEPT:

  A. administrative costs.
  B. disbursement float.
  C. excess balances.
  D. transfer costs.
  B. disbursement float.

• Question 696:

  The MICR encoding on a check provides all of the following information EXCEPT:

  A. the Fed district of the drawee bank.
  B. the payor's bank account number.
  C. the payee bank's institutional identification number.
  D. the dollar amount of the check.
  C. the payee bank's institutional identification number.

• Question 697:

  Which of the following is a benefit to a company that publicly trades its stock?

  A. It passes public disclosure requirements to shareholders.
  B. It reduces management and shareholder conflicts.
  C. It allows management holding a majority ownership to have control.
  D. Its stock price reflects the value of the company in the market.
  D. Its stock price reflects the value of the company in the market.

• Question 698:

  A UK based manufacturer has a subsidiary in Belgium and a manufacturing plant in Italy. The subsidiary wants to sell its products in Sweden. How would the UK parent best structure the movement of funds within the organization to optimize management of working capital while ensuring recourse?

  A. Internal factoring
  B. Re-invoicing
  C. Export financing
  D. Multilateral netting
  A. Internal factoring

• Question 699:

  When company profits are high, what is the MOST LIKELY way management will prefer to finance growth?

  A. By borrowing funds
  B. By retaining earnings
  C. By investing in current assets
  D. By issuing stock
  B. By retaining earnings

• Question 700:

  XYZ Company has a well established commercial paper (CP) program that they use to fund operations. The company is expanding by purchasing a new factory. The CFO is worried about the time and expense needed to issue long-term debt and decides to use the funds they raise in the CP market to pay for the purchase of the factory. This strategy will be successful if:

  A. an interest rate swap is used.
  B. a credit default swap is employed.
  C. a commodities future is purchased.
  D. the yield curve remains upward sloping.
  D. the yield curve remains upward sloping.