AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 871:

  A U.S. financial institution expects to grow at an exponential rate to become one of the largest companies in the country. It wants to hire the best talent in the industry and is willing to pay excessive compensation. In order to achieve the high growth, it is planning on charging hidden fees on mortgages, credit cards etc. Further, it wants to engage in risky practices pertaining to over-the-counter derivatives, asset-backed securities and hedge funds. The financial institution has hired an outside law firm to determine if it is feasible to escape unwanted regulation and oversight from various government entities. Which of the following regulations prohibits the financial institution from engaging in the described practices?

  A. Gramm-Leach-Bliley Act
  B. The Dodd-Frank Act
  C. Sarbanes-Oxley Act
  D. USA Patriot Act
  B. The Dodd-Frank Act

• Question 872:

  An analyst at XYZ Company was assigned with determining if the company should start to use a lockbox provider for its retail payments. The analyst determined that the company's annual sales of $324,000,000 were recorded evenly throughout the year. The Company receives 30,000 checks annually. Total dollar-days float without the lockbox is $76,500,000 and the annual opportunity cost is 5.5%; assume 30-day month. The industry's average opportunity cost is 6.0%. Using the information in the table,what would be the net effect of using the lockbox?

  

  A. Net savings of $57,750
  B. Net savings of $63,000
  C. Net savings of $1,732,500
  D. Net savings of $1,890,000
  A. Net savings of $57,750

• Question 873:

  Because of the growing demand in China for oil, a transportation company decides to assume a long position on oil in hopes of generating short-term investment income. Which of the following describes the firm's strategy?

  A. Speculation
  B. Arbitrage
  C. Hedging
  D. Risk management
  A. Speculation

• Question 874:

  At the time of the initial debt contract, the only way debt holders can protect their interests effectively is to establish certain provisions or covenants designed to:

  A. reduce issuer refinancing options that could result in their bonds being called.
  B. eliminate all events that could result in a default.
  C. make it difficult for management to engage in actions that reduce the bond's value.
  D. give debt holders a guarantee of full principal payment in the event of default.
  C. make it difficult for management to engage in actions that reduce the bond's value.

• Question 875:

  Financial ratios may provide an inaccurate forecast of a company's performance because they are:

  A. difficult to incorporate into statistical forecasting.
  B. economic rather than accounting values.
  C. sensitive to seasonal cash flows.
  D. based on snapshots of the company's activity.
  D. based on snapshots of the company's activity.

• Question 876:

  The Cash Manager of XYZ Corporation is trying to determine today's closing cash position in order to make an investment or borrowing decision. The Cash Manager anticipates wiring $55,000 in tax payments and $63,000 in supplier payments today. Additionally, the Cash Manager is aware that a $15,000 wire was received today into the company's concentration account from a customer and that XYZ Corp. will have to fund a bond interest payment of $200,000 in three days.

  

  Using this information, as well as the data in the table, what is the closing cash position for XYZ Corporation?

  A. $(225,000)
  B. $(52,000)
  C. $(40,000)
  D. $(25,000)
  D. $(25,000)

• Question 877:

  Which of the following trade payment methods virtually eliminates the seller's credit risk?

  A. Bankers' acceptance
  B. Cash before delivery
  C. Countertrade
  D. Consignment
  B. Cash before delivery

• Question 878:

  The telecommunications network used to transmit international payment instructions is called:

  A. the giro system.
  B. SWIFT.
  C. CHIPS.
  D. CHAPS.
  B. SWIFT.

• Question 879:

  Company XYZ is now required to make electronic payments by its suppliers. To prevent an increase in costs, the company shoulD.

  A. negotiate a change in payment timing with its suppliers.
  B. institute a just-in-time inventory system.
  C. negotiate a change in cash disbursement with its concentration bank.
  D. institute a modified RSA system for its inventory.
  A. negotiate a change in payment timing with its suppliers.

• Question 880:

  A company is evaluating a project. What is the appropriate discount rate that it should use if its marginal tax rate is 34%, its capital structure is 40% common equity, and 60% debt. Its cost of equity is 10%, and its average cost of debt is 4%?

  A. 5.04%
  B. 5.30%
  C. 5.58%
  D. 6.40%
  C. 5.58%