Certified Treasury Professional v7.0 (CTP)

Page:    1 / 63   
Total 939 questions

A telecommunications company receives a profit of $587,542 from its cellular phone production unit in the year after investing $962,870 in a new product line. What is the first year return on its original investment?

  • A. 56%
  • B. 58%
  • C. 61%
  • D. 64%


Answer : C

A company has a line of credit and a bond trustee agreement with a bank. To prevent a decline in the companys bond rating from having a negative impact on the companys line of credit, the bank should have which of the following in place?

  • A. Code of conduct
  • B. Confidentiality agreement
  • C. Notional barrier
  • D. Risk profile


Answer : C

ABC Company is a national retail company and uses XYZ Bank for its collections and payroll services. XYZ has recently experienced financial problems; what is the greatest risk to ABC Company?

  • A. Damage to their working relationship
  • B. Deterioration of service quality
  • C. Increase in service fees
  • D. Loss of assets


Answer : D

A real estate development company has excess cash that it would like to invest in one of its properties:
-> Property A has shown an ROI of 40%, a residual income of $25,675, and an EVA of $32,678.
-> Property B has shown an ROI of 45%, a residual income of $27,635, and an EVA of $29,523.
-> Property C has shown an ROI of 55%, a residual income of $22,658, and an EVA of $30,678.
-> Property D has shown an ROI of 52%, a residual income of $19,675, and an EVA of $31,523.
In which property should the company invest?

  • A. Property A
  • B. Property B
  • C. Property C
  • D. Property D


Answer : A

A deck furniture supply company maintains a large inventory during the summer sales season. One of the PRIMARY benefits of this approach is that the company avoids which of the following costs?

  • A. Holding
  • B. Opportunity
  • C. Order
  • D. Stock-out


Answer : D

One of the advantages of raising capital through public offerings is that:

  • A. it reduces fluctuations in the price of capital.
  • B. it reduces the costs of managing reporting and disclosure.
  • C. large amounts of debt and equity can be raised at the risk-free rate.
  • D. large amounts of debt and equity can be raised at prevailing rates.


Answer : D

In terms of capital structure, lease financing normally has the same effect as:

  • A. investing.
  • B. borrowing.
  • C. capitalizing.
  • D. lending.


Answer : B

One reason for using a sale and lease-back arrangement in lease financing is to:

  • A. create an infusion of cash into the company.
  • B. benefit from tax advantages from depreciation.
  • C. account for income or costs in one period.
  • D. eliminate off-balance sheet debt.


Answer : A

Convertible securities consist of preferred stock anD.

  • A. treasury stock.
  • B. common stock.
  • C. bonds.
  • D. tracking stock.


Answer : C

A public companys risk profile is currently in balance. The managements mission statement is to minimize stock devaluation. However, it is forecasting a need for working capital in the short term. Which of the following solutions would BEST assist management in accomplishing its mission?

  • A. Redeem outstanding shares
  • B. Issue additional shares
  • C. Use debt financing
  • D. Pay out dividends


Answer : C

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


Answer : B

Kahuna Boards Co. has just experienced a very profitable year and wants to share the success with its shareholders. In order to pay dividends, a sequence of events must occur.
Which of the following chronological sequence of events is correct?
1. Stock is sold without the upcoming dividend attached.
2. Dividend is paid.
3. Board of directors announces the dividend.
4. Holders of record are specified.

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


Answer : A

During the 1970s, many companies instituted dividend reinvestment plans (DRIPS). There are many benefits of this plan. What is the one negative aspect?

  • A. Reduces the expense of shareholder relations
  • B. Leads to an increase in the number of small shareholders
  • C. Does not allow automatic reinvestment of dividends
  • D. Leads to a reduction in the number of small shareholders


Answer : B

Company A regularly modifies its capital structure by repurchasing stock. Which one of the following is a true statement?

  • A. Investors may feel that management is manipulating the stock price.
  • B. Stock repurchases are not an attractive alternative to dividend payments.
  • C. Partial disclosure to the SEC is required for repurchases.
  • D. Stock repurchases do not offer tax deferral advantages over dividends.


Answer : A

What is the PRIMARY issue that management needs to consider when determining capital structure?

  • A. Maintaining control of ownership
  • B. Complying to rating agency and lender restrictions
  • C. Using common stock as a source of funds
  • D. Determining the mix of debt versus equity


Answer : D

Page:    1 / 63   
Total 939 questions