Term
A multinational company that uses regional treasury centers would best be described as using which of the following types of international treasury management organization?
a.)Segmented
b.)Decentralized
c.)Centralized
d.)Combined |
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Definition
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Term
Before spending a great deal of time on a proposed project, a company wants to find out if any of hte numerous vendors in the area have the expertise to meet thier needs. Which of hte following would BEST fit their needs?
a.)Informal selection process
b.)Request for quote (RFQ)
c.)Request for proposal (RFP)
d.)Request for information (RFI) |
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Definition
| d.)Request for information (RFI) |
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Term
All of the following are components of the "three pillars" concept of Basel II EXCEPT
a.)Supervisory review process
b.)Minimum capital requirements
c.)Standardized risk-based capital rating
d.)Market dicipline |
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Definition
| c.)Standardized risk-based capital rating |
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Term
Which of the following can a country use to slow down foreign investment in the country?
a.)Whitholding tax
b.)Capital tax
c.)Lifiting fees
d.)Foreign tax credit |
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Definition
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Term
All of the following are used to determine required collected balances EXCEPT
a.)transaction volume
b.)unit service price.
c.)earnings credit rate
d.)availability of funds. |
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Definition
d.)availability of funds.
Chapter 2 |
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Term
Which of hte following types of financial institutions executes the distribution side of an investment bank's intermediation function and can sell research that has some guarantee of independence?
a.)Discount underwriting firm
b.)Discount brokerage firm
c.)Full-service brokerage firm
d.)Full-service underwriting firm |
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Definition
c.)Full-service brokerage firm
Chapter 3 |
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Term
A company can use all of the following documents to establish a relationship wiht a bank EXCEPT
a.)signature card.
b.)account analysis statements.
c.)account resolutions.
d.)service agreements. |
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Definition
b.)account analysis statemetns.
Chapter 3 |
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Term
A country passes a law stating that international businesses wishing to operate in that country must be owned by resident nationals. What type of political risk does this scenairo present?
a.)FX rate
b.)Forced reinvestment
c.)Blcoked currencies
d.)Required majority ownership |
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Definition
d.)Required majority ownership
Chapter 3 |
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Term
Group the following corporate positions along the usual reporting hierarchy.
I.Treasurer
II.Controller
III.Accounts payable manager
IV.Cash Manger
a.)III and IV report to I, and I reports to II.
b.)IV reports to I, and III reports to II>
c.)III and IV report to II, and II reports to I.
d.)III reports to I, and IV reports to II. |
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Definition
b.)IV reports to I, and III reports to II.
Chapter 1 |
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Term
The obligation of a bank and its customers to agree on the procedures to verify funds transfer payments is specified in
a.)the Federal Reserve Payments System Risk Policy.
b.)UCC Article 4A.
c.)the Electronic Funds Transfer Act.
d.)Regulation E. |
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Definition
b.)UCC Article 4A.
Chapter 2 |
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Term
Match the following investment banking services of commercial banks with their definition.
I.Commercial paper
II.Loan sales
III.Private placements
A.Selling short-term loans to other banks
B.Direct sale of long-term loans to institutional investors
C.Unsecured, short-term promissory notes
a.)I: B, II: C, III: A
b.)I: C, II: A, III: B
c.)I: B, II: A, III: C
d.)I: A, II: B, III: C |
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Definition
b.)I: C, II: A, III: B
Chapter 3 |
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Term
The primary objective of cash management is to
a.)use the firm’s liquidity as effectively as possible.
b.)prepare financial statements and budgets in accordance with IFRS or GAAP.
c.)develop controls on collection and disbursement systems to protect the company against loss.
d.)establish credit policies and monitor accounts receivable balances. |
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Definition
a.)use the firm's liquidity as effectively as possible.
Chapter 1 |
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Term
Which of the following is a U.S. not-for-profit financial corporation that could be either federally or state chartered and allows business affiliates to join to possibly receive higher savings and lower lending rates?
a.)Non-bank financial institution
b.)Mutual fund
c.)Savings institution
d.)Credit union |
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Definition
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Term
All of the following are true of the USA PATRIOT Act EXCEPT
a.)It imposes significant obligations upon non-bank financial institutions including broker dealers, credit card companies and check cashing services.
b.)It prohibits U.S. banks from maintaining, either directly or indirectly, correspondent accounts for any foreign banks.
c.)It makes all foreign banks with accounts in the U.S. subject to U.S. jurisdiction.
d.)It prevents operators of U.S. credit card systems from authorizing foreign banks to issue or accept U.S. credit cards without taking steps to prevent terrorist usage. |
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Definition
b.)It prohibits U.S. banks from maintaining, either directly or indirectly, correspondent accounts for any foreign banks.
Chapter 2 |
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Term
Which of hte following is LEAST likely to appear on a company's account analysis?
a.)Average deposit float
b.)Money market rate
c.)Service charges
d.)Earnings credit rate |
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Definition
b.)Money market rate
Chapter 3 |
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Term
A banker's acceptance (BA) is created when a bank accepts payment responsibility for a draft issued in connection with which of the following?
a.)Letter of credit (L/C)
b.)T-bill
c.)Repurchase agreement
d.)Commercial paper (CP) |
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Definition
a.)Letter of credit (L/C)
Chapter 3 |
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Term
Which of the following is true of ERISA pension plan terminations?
a.)Employers who deem themselves to be financially troubled qualify for distress termination
b.)Under distress termination the PBGC takes over the plan
c.)Rules for ending defined contribution plans are not covered under ERISA
d.)The PBGC must approve all standard terminations |
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Definition
c.)Under distress termination the PBGC takes over the plan.
Chapter 2 |
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Term
Hybrid plans combine the features of which of the following?
Select all that apply.
a.)Defined Contribution plans
b.)Tax-deferred annuities
c.)Defined benefit plans
d.)Defined benefit assets |
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Definition
a.)Defined contribution plans
c.)Defined benefit plans
Chapter 2 |
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Term
The primary job of bank regulators includes which of the following?
I.Implementing safeguards to reduce systemic failure risks
II.Ensuring depositors have an incentive to investigate prospective bank creditworthiness
II.Placing restrictions on the actions banks can take
IV.Monitoring credit and liquidity risks relating to potential bank failures
a.)I and IV only
b.)I, III and IV only
c.)I, II, III and IV
d.) II and III only |
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Definition
b.)I, III and IV only
Chapter 2 |
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Term
Which of the following is tru of the Deposit Insurance Fund (DIF)?
a.)Insured institutions pay a premium based solely on their level of deposits
b.)The Office of the Comptroller of the Currency (OCC) administers the fund for national banks and federal thrifts with less than $50 billion in assets.
c.)The DIF is not backed by the full faith and credit of the U.S. government, but there is a strong implication that it would intervene in an emergency.
d.)The Federal Deposit Insurance corporation (FDIC) administers the fund for both banks and thrift institutions. |
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Definition
d.)The Federal Deposit Insurance Corporation (FDIC) administers the fund for both banks and thrift institutions.
Chapter 2 |
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Term
Which of the following statemetns is true about banks' compensation policies?
a.)Cash rebates can be paid to companies that maintain excess balances.
b.)Accounts may not be combined for analysis.
c.)Earnings credits are calculated on the basis of ledger balances.
d.)Earnings credits can be carried over to future periods at some banks. |
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Definition
d.)Earnings credits can be carried over to future periods at some banks.
Chapter 3 |
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Term
All of the following are examples advantages of using centralized control in treasury operations EXCEPT
a.)reduced burden in compliance efforts (e.g.,SOX and FCPA for U.S. companies).
b.)reduced duplication of efforts.
c.)increased control and economies of scale.
d.)increased autonomy to field office personnel. |
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Definition
d.)increased autonomy to field office personnel.
Chapter 1 |
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Term
Which of the following are reasons for hte popularity of shared service centers?
Select all that apply.
a.)Global treasury management systems standardize information
b.)Web-based technology oculd make SSCs less expensive than outsourceing
c.)Many global treasury bank-office operations require local management from an SSC and cannot use centralized treasury management.
d.)SSCs may help the treasury area justify its cost in a cost-cutting environment. |
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Definition
a.Global treasury management systems standardize information.
b.)Web-based technology could make SSCs less expensive than outsourcing
d.)SSCs may help the treasury area justify its cost in a const-cutting enviornment.
Chapter 1 |
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Term
A company maintains an average collected balance of $250,000 at its bank during July (31 days). If the bank's reserve requirement is 10% and its earnings credit rate is 6%, the company has compensated the bank for which of the following dollar amounts of monthly service charges?
a.)$1,146
b.)$1,401
c.)$1,274
d.)$1,125 |
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Definition
a.)$1,146
Earnings Credit = CB * (1-PR) * {ECR*D/365 Days}
Chapter 3 |
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Term
Which of the following enforces the Employee Retirement Income Security Act of 1974 (ERISA)?
I.Departmetn of Labor (DOL)
II. Internal Revenue Service
III. Social Security Administration
a.)II only
b.)I only
c.)I and II only
d.)I and III only |
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Definition
c.)I and II only
Chapter 2 |
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Term
In a large organization, the board of directors can grant authority to senior management to do all of the following EXCEPT
a.)devise and execute risk management strategies.
b.)oversee investments.
c.)make dividend payment decisions.
d.)issue debt and equity securities. |
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Definition
c.)make dividend payment decisions.
Chapter 1 |
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Term
All of the following statemetns about methods to provide efficient treasury operations are true EXCEPT
a.)key metrics used in benchmarking typically include reductions in costs or error rates.
b.)application of Six0Sigma to th etreasury area is an example of benchmarking.
c.)in some instances, the entire treasury function may be outsourced.
d.)reengineering requries the rationalization of all current treasury procedures. |
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Definition
b.)application of Six-Sigma to the treasry area is an example of benchmarking.
Chapter 1 |
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Term
Which of the following BEST expresses the primary objective of managers of a publicly held corporation?
a.)Maximizing the value of common stock over the long term
b.)Maximizing revenues over the long term
c.)Maximizing the value of common stock over the short term
d.)Maximizing revenues over the short term |
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Definition
a.)Maximizing the value of common stock over the long term.
Chapter 1 |
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Term
Bank relationship management includes which of the following factors that should lead to mutual benefit?
I.Maintaining open and frequent two-way communications
II.Withholding of information useful in bargaining
III.Fairly priced, efficient and effective financial services/products
a.)III only
b.) I, II and III
c.)I and III only
d.)I only |
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Definition
c.)I and III only
Chapter 3 |
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Term
A key objective of successful treasury management is
a.)creating an investmetn policy.
b.)indexing securities to the market.
c.)ensuring liquidity.
d.)increasing dividend income. |
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Definition
c.)ensuring liquidity.
Chapter 1 |
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Term
Money market demand accounts (MMDAs)
a.)generally allow no more than six withdrawals per calendar month or statement cycle.
b.)pay a rate of interest regulated by the U.S. Federal Reserve.
c.)prohibit any withdrawals in the form of check, draft or debit card.
d.)are available only to individuals, sole proprietorships, not-for-profit organizations and government entities. |
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Definition
a.)generally allow no more than six withdrawls per calendar month or statemetn cycle.
Chapter 3 |
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Term
All of the following are functions of the Federal Reserve System EXCEPT
a.)purchasing and selling of U.S. government securities.
b.)examining national banks for loan quality.
c.)holding collateral for government agencies.
d.)clearing of checks between depository institutions. |
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Definition
b.)examining national banks for loan quality.
Chapter 2 |
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Term
A request for proposal (RFP) issuer should ask the potential provider to supply their very best prices because
a.)these are the prices that will be used as the basis for final price negotiations.
b.)while the prices are not contractual obligations, they are used to narrow the field of candidates.
c.)these are the prices that will apply if the provider wins the business.
d.)the AFP Service Codes© list benchmark prices for each service and prices supplied should be competitive. |
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Definition
c.)these are the prices that will apply if the provider wins the business.
Chapter 3 |
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Term
Which of the following documents can a treasury professional use in the financial analysis of a U.S. bank because it shows the impact of management decisions and economic conditions on a bank's performance and balance sheet composition in a concise format?
a.)Account Analysis Transaction Set 822
b.)Uniform Bank Performance Report (UBPR)
c.)CAMELS rating
d.)Bank scorecard |
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Definition
b.)Uniform Bank Performance Report (UBPR)
Chapter 3 |
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Term
Which of the following usually shows up on a bank's schedule of service charges?
a.)Earnings credit for balances
b.)ACH maintenance charges
c.)Deficient balance charges
d.)Availability schedules |
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Definition
b.)ACH maintenance charges
Chapter 3 |
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Term
Which of the following is handled in most countries (notably not the U.S.) by incorporating both an investment rate and a credit agreement into demand deposit accounts (DDAs)?
a.)Use of zero balance and sweep accounts
b.)Use of overdrafts
c.)Back value dating
d.)Forward value dating |
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Definition
b.)Use of overdrafts
Chapter 3 |
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Term
A federal or state-chartered financial institution that both accepts deposits and makes loans is a
a.)brokerage firm.
b.)consumer credit company.
c.)commercial bank.
d.)mutual fund provider. |
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Definition
c.)commercial bank.
Chapter 3 |
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Term
The internal auditor typically reports directly to the
a.)board of directors.
b.)chief financial officer.
c.)chief executive officer.
d.)treasurer. |
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Definition
a.)board of directors.
Chapter 1 |
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Term
Which of the following would normally fall under the purview of the controller?
a.)Foreign exchange (FX) risk management
b.)Collection/concentration
c.)Borrowing
d.)Financial reporting |
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Definition
d.)Financial reporting
Chapter 1 |
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Term
For a United States company to be successful in selling overseas, it should do which of the following?
Select all that apply.
a.)Understand the laws and political and social dynamics of the countries in which it does business
b.)Understand the unique banking systems and practices in the countries in which it does business
c.)Become a member of SWIFT or CHIPS
d.)Enter into a standby letter of credit arrangement with a local bank in the countries in which it does business |
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Definition
a.)Understand the laws and political and social dynamics of the countries in which it does business
b.)Understand the unique banking systems and practices in the countries in which it does business
Chapter 3 |
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Term
Which of the following criteria should be used when a company is selecting a financial service provider (FSP)?
I.Geographic considerations
II.Commitment to, or knowledge of, the company's specific industry
III.Pricing
IV.Ability to innovate new services and update technologies
a.)I, II and IV only
b.)II, III, and IV only
c.)I, II, III and IV
d.) I, II and III only |
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Definition
c.)I, II, III and IV
Chapter 3 |
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Term
Which of the following are typical responsibilities of a treasurer?
I.Bank relationship management
II.Internal audit
III.Short-term borrowing
IV.Liquidity management
a.)II and III only
b.)I, III and IV only
c.)I and II only
d.)I and IV only |
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Definition
b.)I, III and IV only
Chapter 1 |
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Term
Which of the following would define a pension plan that aggregates and discounts all projected future benefit payments and whose assets have a fair market value of greater than this discounted amount?
a.)Defined benefit plan is underfunded
b.)Defined benefit plan is overfunded
c.)Defined contribution plan is underfunded
d.)Defined contribution plan is overfunded |
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Definition
b.)Defined benefit plan is overfunded.
Chapter 2 |
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Term
Which of the following is true of defined contribution plans?
a.)Employers bear a significant amount of expense for plan valuation
b.)They require investment management on the part of the employee
c.)Employer responsibilities may still include significant record keeping and employee education
d.)When a plan is participant-directed, the participant is technically considered a fiduciary |
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Definition
c.)Employer responsibilities may still include significant record keeping and employee education
Chapter 2 |
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Term
Which of the following are true of international banking arrangements?
I.Overnight investment sweep accounts are necessary in most other countries.
II.In most countries, banks pay interest on corporate demand deposit accounts when they have surplus balances.
III.Most countries require deposit balances to be held in the currency of the country of location.
IV.In some countries, banks are permitted to own a controlling ownership position in corporations.
a.)I, II and IV only
b.)II, III and IV only
c.)II and IV only
d.)I, II and III only |
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Definition
c.)II and IV only
Chapter 3 |
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Term
Which of the following is true of a bank's earnings credit rate (ECR)?
a.)The ECR is tied to the London Interbank Offered Rate (LIBOR) and is therefore nonnegotiable.
b.)Regulation Q prohibits an ECR from being applied to a demand deposit account (DDA).
c.)Diversifying operations among a number of banks will generate a higher overall ECR.
d.)Increasing volume of business with a bank can help a firm negotiate a higher ECR. |
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Definition
d.)Increasing volume of business with a bank can help a firm negotiate a higher ECR
Chapter 3 |
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Term
When opening a new bank account for a public corporation traded on the NYSE, which of the following documents would the treasury management function require?
I.CEO certification of NYSE corporate governance compliance
II.Corporate resolution or certificate of incumbency
III.Proxies for a majority of shareholders
IV.Corporation’s articles of incorporation and bylaws
a.)I and IV only
b.)II, III and IV only
c.)I, II and III only
d.)II and IV only |
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Definition
d.)II and IV only
Chapter 1 |
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Term
The tightening of U.S. corporate governance standards in 2002 is a major issue to which of the following?
Select all that apply.
a.)Publicly owned U.S. corporations
b.)Foreign corporations with U.S. operations but not traded in the United States
c.)Foreign corporations without U.S. operations or trading in the United States
d.)Privately owned U.S. corporations
e.)Foreign corporations with U.S. operations that are traded in the United States |
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Definition
a.)Pubilicly owned U.S. corporations
d.)Foreign corporations with U.S. operations that are traded in the United States.
Chapter 1 |
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Term
All of the following statements are true about unsecured senior debt obligations EXCEPT
a.)The holders have first claim on the assets of a company in the event of liquidation among general or unsecured creditors.
b.)They are subordinate to unfunded pension plan liabilities for an amount up to 30 percent of the book value of equity.
c.)They offer less risk than subordinated debt.
d.)They typically pay investors a higher rate of interest than subordinated debt. |
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Definition
d.)They typically pay investors a higher rate of interest than subordinated debt.
Chapter 2 |
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Term
When a syndicate of investment bankers participates in buying and reselling a security issue under a full-underwriting arrangement, the syndicate
a.)assumes no risk for price and marketability of the issue.
b.)usually sells the issue wholesale to an investor.
c.)pays the company for the issue and the company will receive no more funds for those securities.
d.)gives each member a proportional share of administrative duties and collected fees. |
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Definition
c.)pays the company for the issue and the company will receive no more funds for those securities.
Chapter 3 |
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Term
A summary plan description and the ERISA statement of rights are plain language documents required by which of the following?
a.)Federal Deposit Insurance Corporation (FDIC)
b.)Internal Revenue Service
c.)Department of Labor
d.)Pension Benefit Guaranty Corporation (PBGC) |
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Definition
c.)Department of Labor
Chapter 2 |
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Term
All of the following are components of bank creditworthiness analysis EXCEPT
a.)earnings.
b.)liquidity.
c.)securitization.
d.)asset quality. |
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Definition
c.)securitization
Chapter 3 |
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