AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 841:

  The process by which a bank or insurance company guarantees the debt obligation of a borrower is referred to as credit:

  A. enhancement.
  B. rating.
  C. scoring.
  D. options.
  A. enhancement.

• Question 842:

  Which of the following investment instruments would provide a company with the greatest liquidity and least risk?

  A. Certificate of deposit
  B. Commercial paper
  C. Certificate of participation
  D. Treasury bill
  D. Treasury bill

• Question 843:

  Which of the following is a tool that companies use to obtain a quantitative rating of a financial institution's level of service?

  A. Relationship review
  B. Score card
  C. Service agreement
  D. CAMELS rating
  B. Score card

• Question 844:

  A company has selected a specific project for investment. If the weighted average cost of capital (WACC) used to evaluate the project results in a negative net present value (NPV), which of the following will occur?

  A. The WACC will be reduced.
  B. The overall value of the company will be increased.
  C. The overall value of the company will be reduced.
  D. The overall value of the company will not be impacted.
  C. The overall value of the company will be reduced.

• Question 845:

  A convenience store chain would typically use which of the following types of collection systems?

  A. Retail lockbox
  B. Network of wholesale lockboxes
  C. Pre-authorized payment program
  D. Field deposit system
  D. Field deposit system

• Question 846:

  In developing treasury policies and procedures, which activity requires key controls to be in place?

  A. Revenue recognition
  B. Debt management
  C. Tax management
  D. Materials loss prevention
  B. Debt management

• Question 847:

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

  A. Riding the yield curve
  B. Using a dividend capture program
  C. Investing in overnight repos
  D. Executing a securities swap
  C. Investing in overnight repos

• Question 848:

  "Fees" in Country Y, which would be considered bribes in the United States, are ingrained in the commercial culture. A U.S. company doing business in Country Y:

  A. may have moral but not legal issues with paying "fees" in Country Y.
  B. is prohibited by U.S. law from paying "fees" in Country Y.
  C. may receive an IRS tax credit for "fees" paid in Country Y.
  D. may pay the "fee" in Country Y but cannot take an IRS tax deduction.
  B. is prohibited by U.S. law from paying "fees" in Country Y.

• Question 849:

  A put option on a company's stock has an exercise price of $20. On the delivery date, the stock is trading at $24 per share. What should the investor who has paid $2 for the option do?

  A. Not exercise the option and lose $2.
  B. Not exercise the option and lose $6.
  C. Exercise the option and gain $2.
  D. Exercise the option and gain $4.
  A. Not exercise the option and lose $2.

• Question 850:

  Which statement is true about private placements compared to public offerings?

  A. They take more time to complete.
  B. They reduce issuance costs.
  C. They have more restrictive covenants.
  D. They have lower interest rates.
  B. They reduce issuance costs.