AFP AFP-CTP Online Practice Questions and Exam Preparation

AFP AFP-CTP Online Questions & Answers

• Question 881:

  Which agency implements monetary policy through purchases and sales of treasury securities?

  A. Federal Deposit Insurance Corporation
  B. Fannie Mae
  C. Office of the Comptroller of the Currency
  D. Federal Reserve
  D. Federal Reserve

• Question 882:

  Which of the following options would be BEST suited for a firm that wishes to pay no premium?

  A. Cap
  B. Collar
  C. Floor
  D. Swaption
  B. Collar

• Question 883:

  Company A and Company X are small companies doing business with only one bank. Company A has monthly sales of approximately $1.1 million and Company X has sales of $750,000. Typically, Company A holds daily available cash balances in the range of $175,000 to $250,000 and Company X holds $90,000 to $125,000. Which of the following can be said of the cash management practices of both companies?

  A. Company X has more counterparty risk than Company A.
  B. Company A has more supplier risk than Company X.
  C. Company A has more financial institution risk than Company X.
  D. Company X has more credit risk than Company A.
  C. Company A has more financial institution risk than Company X.

• Question 884:

  A company transfers funds from its remote accounts by ACH with a one-day settlement and is notified of a same-day credit of $100,000 in one of its accounts. A wire transfer costs $27.75 incrementally. Assuming a 360-day year, which of the following is the minimum rate of interest that must be earned on these funds to justify the cost of a wire transfer?

  A. 8.00%
  B. 9.25%
  C. 10.00%
  D. 10.50%
  C. 10.00%

• Question 885:

  The Fed can reduce the money supply by doing which of the following? 1.Increasing reserve requirements 2.Purchasing government securities 3.Increasing legal lending limits 4.Selling government securities

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

• Question 886:

  A multinational company that uses "notional pooling" for its euro zone subsidiaries will realize which of the following advantages?

  A. Enhanced accounting for transactions since funds are transferred into one account
  B. Mobilization of cash resources and thus economies of scale in making transfers
  C. Subsidiary cash balances are netted each day to calculate interest, but funds are not transferred
  D. An expanded number of euro zone banks in order to facilitate better service to transfer funds
  C. Subsidiary cash balances are netted each day to calculate interest, but funds are not transferred

• Question 887:

  Company XYZ is a high technology company. It is planning on acquiring another company in the high technology sector. Company XYZ does not have enough cash to acquire the company and is planning on financing the acquisition through a bond offering. Which of the following measures is company XYZ MOST LIKELY to use in its analysis of operating profits considering it is a high debt transaction?

  A. Long-term debt to capital
  B. EBITDA margin
  C. Net profit margin
  D. Return on equity
  B. EBITDA margin

• Question 888:

  The yield curve is inverted. A creditworthy firm considering alternative debt maturities would MOST LIKELY:

  A. enter into a short-term floating rate agreement.
  B. obtain long-term fixed interest rate debt.
  C. roll-over short-term debt at each maturity.
  D. obtain a long-term floating rate agreement.
  B. obtain long-term fixed interest rate debt.

• Question 889:

  Company A has operated a Pension Plan since 1985. Despite a recent surge in asset values, the plan remains significantly underfunded. With the passage of the Pension Protection Act of 2006, Company A will be need to:

  A. increase long-term investments.
  B. liquidate long-term investments.
  C. pay higher PBGC premiums.
  D. take no action.
  C. pay higher PBGC premiums.

• Question 890:

  A comprehensive payables service can do all of the following EXCEPT:

  A. send checks to a vendor.
  B. wire funds to a bank.
  C. set up ACH transfers.
  D. concentrate lockbox deposits.
  D. concentrate lockbox deposits.