Racklyn Paint Company, a new paint and construction company, has vendor payables of $2 million due periodically over the next 3 months; payroll payable to its crews of $500K each month; a mortgage of $4.4 million with a fixed rate of 6.0%; and an equipment loan of $5 million with a bank at a 30-day LIBOR plus 150 bp payment of $100K due monthly. Racklyn receives their first contract valued at $12 million with half of the contract value due at the time of contract and final payment upon completion. Racklyn expects the job to last 6 months. Which option would be the BEST use of Racklyn Paint Company’s cash?

The CFO asks the Treasurer to create a new collections and concentration policy for their company. Following implementation of the policy, the company finds that reporting of receivables values is taking 10% longer, with no improvement in the company’s cash flow or liquidity. What step in developing the policy could have been executed better?

XYZ Company has incurred a financially devastating event because of a hurricane at its offshore manufacturing plant. Due to the impact on liquidity, the company may not be able to survive. What should the Treasurer have done in order to assess the risk associated with this type of event?

Which of the following is a component of a company’s operating budget?

The Treasurer for XYZ Manufacturing, Inc. recently exchanged a portion of its euro holdings into U.S. dollars to purchase gas futures contracts. This was done in anticipation of an assumed rise in gas prices due to the continued weakening of the U.S. dollar. Which of the following types of risk is being mitigated?

XYZ Company is a U.S. based company that has just issued some euro-denominated bonds in London. The bonds have a duration of 10 years at a rate of 3.5% with a par value of EUR 50 million. An FX swap contract was created on the date of the issuance in EUR/USD, with a spot rate of 1.2908 and a forward rate of 1.1102. This bond is subject to what type of risk?

XYZ Company is a fairly new and high growth company funded by venture capital. Which of the following performance measures is it MOST LIKELY to use?

PTC Corporation has determined that the threshold amount for initiating a wire transfer vs. an ACH payment for concentrating funds is $60,225. Wires cost $9.00 and save one day of float. If the opportunity cost is 5%, what is the cost of the ACH payment?

A put option gives the holder the right to:

The first step in the financial institution and financial services provider (FSP) selection process should be:

An employer wishing to reduce operating income volatility would MOST LIKELY offer what type of retirement option to its employees?

Which of the following statements are true about collected balances?

I. They can be lower than ledger balances.

II. They are influenced by the bank's availability schedule.

III. They exclude negative account balances.

IV. They may generate an earnings credit.

CT Check Cashing routinely cashes payroll checks from JD Software. Someone presents a fraudulent check from JD Software to CT Check Cashing. The fraudulent item looks virtually identical to JD Software's regular payroll checks. CT Check Cashing pays the person cashing the check the amount for which it is issued. CT Check Cashing later discovers that the check was fraudulent and wants JD Software to reimburse them for the amount of the check. Which of the following statements is correct?

Optimal dividend policy is one that does all of the following EXCEPT:

If a company has $126 million in debt at an average cost of 7% and $234 million in equity at a cost of 11%, what is its weighted average cost of capital, assuming a marginal tax rate of 35% and a risk-adjusted rate of 13%?

Netting is used by which of the following as a cross-border payment technique?

Future treasury operations will be affected MOST significantly by consolidation of which of the following?

BF Company, a manufacturer of food products, reported financial information shown in the Exhibit for the end of the year. BF Company is subject to covenants in its commercial paper program. It is in compliance with which of the following?

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?

Merchant MNO’s sales for the day total $20,000. Fifty percent are credit cards, split between Card Red and Card Blue respectively, at 65% and 35% of the card volume. The average ticket is $50. Fees paid are 2% for Card Red and 2.5% for Card Blue and a fee of $0.05 per transaction. What are the fees that MNO will pay to the issuing banks?

If a company uses accrual accounting, deferred taxes are reported on which financial statement?

Upon entering into an interest rate swap with a notional principal of $10,000,000, what is the initial amount of money the counterparties must exchange at the beginning of the swap?

XYZ Corporation is presently a short-term borrower and uses a revolving line of credit with an interest rate of 7%. The Treasurer would like to reduce interest expense and increase liquidity without renegotiating the line of credit. Which of the following projects should the Treasurer support in order to achieve this objective as quickly as possible?

A company agrees to pay ¥10,000,000 for a shipment from Japan. At the time the purchase order is placed the exchange rate is ¥168/US$. At the time of payment the exchange rate is ¥163/US$. What is the net effect on the dollar cost of the shipment if the transaction has NOT been hedged?

Which of the following are treasury management objectives?

I. To meet obligations in a timely manner

II. To minimize holdings in non-earning cash balances

III. To monitor and assist in the control of financial risk

IV. To evaluate costs and benefits of capital projects

On a daily basis, the cash manager is responsible for all of the following EXCEPT:

An international company would establish a re-invoicing center for which of the following reasons?

A company has a beginning cash balance of $50,000. Its weekly cash flow forecast shows the following information for the next three weeks.

Which of the following statements is true?

A UK based manufacturer has a subsidiary in Belgium and a manufacturing plant in Italy. The subsidiary wants to sell its products in Sweden. How would the UK parent best structure the movement of funds within the organization to optimize management of working capital while ensuring recourse?

An international organization has decided to move its treasury operations to the head office in Paris, France. The company’s goal is to establish the treasury as the primary provider of banking services and all company financing. What would the new proposal be an example of?

A large U.S. based multinational corporation favors use of intra-company loans to repatriate funds from its foreign subsidiaries in order to take advantage of the favorable tax treatment of loans. In those countries which restrict repayment of intra-company loans the corporation may need to:

Subtracting dividends from net income available to common shareholders is reflected as a change to which of the following balance sheet items?

Which of the following is a service typically provided by an investment custodian?

An organization must maintain adequate liquidity to meet:

A company pays its vendors with the following methods:

• 2,600 checks, averaging $1,000 each, issued on the 15th of the month
• 1,000 ACH payments, averaging $2,000 each, on Wednesdays
• 500 ACH payments, averaging $500 each, on the first Monday of the month
• 10 wires on the last day of the month for approximately $260,000 each

If the company has a daylight overdraft agreement, which of the above presents the highest single-day credit risk for the bank if the company enters bankruptcy?

The PRIMARY goal of treasury management is to use which of the following efficiently?

What is the primary weakness of a risk management policy that includes risk control without specifically providing a plan for risk financing?

A multinational corporation with many FSPs requires a TMS that can display extensive and complex information in an effective manner. The corporation will be looking for a TMS with what functionality?

What activity should the Treasurer be most interested in if core treasury functions were to be compared within the industry or cross-industry for the purpose of identifying “best practices”?

Which of the following is LEAST likely to appear on an account analysis?

The delay between the time a lockbox site receives a check and the check is deposited is called:

A Treasury Management System (TMS) is used to:

All treasury policies should be approved by:

Which of the following is one of the PRIMARY considerations when establishing treasury policies and procedures?

An equity management company’s Chief Financial Officer and Treasurer are evaluating their corporate investments and decide that they need to diversify their stock holdings to include personal care products companies. Based on their analysis, publicly-traded companies A and B stand out as choices. Company A has a beta value of 0.65 while company B has a beta value of 1.10. They decide to invest in Company A. What objective of their investment policy did they use to make their decision?

An individual has just inherited several million dollars and has decided to purchase the stock of a telecommunications company to diversify his portfolio. Before purchasing shares, he would like to do some company-specific research to determine which company to select. Examples of the information the individual wishes to obtain are financial statements and disclosures, company organizational structure, code of conduct, pending litigation, and profiles of the board of directors. Who would be the BEST person to contact to obtain all this information?

XYZ Holdco has multiple credit facilities with a bank under a borrowing agreement that includes certain covenants. A fire has destroyed the manufacturing plant owned by ABC, one of the XYZ subsidiaries that is part of the credit facilities. All loans, including the ABC loan, are up to date and being repaid as required. However, after the fire, the bank notified XYZ that it was in default. Which one of the following covenants is MOST LIKELY a term of the borrowing agreement?

XYZ Bank would like to conduct some foreign exchange transactions with JKL Bank. JKL isn’t the most liquid and could have some credit risk. XYZ Bank should suggest which of the following in order to eliminate risk?

Which of the following capital budgeting methods ignores the time value of money?

The Treasury Manager of a chain of department stores wants to develop a medium-term forecast. Management plans to open two new stores, and anticipates same-store sales to increase by 15%. Which of the following items can be predicted with the highest degree of certainty?

A company may choose to outsource some of its cash management processes to:

Check MICR line information includes which of the following?

I. Bank of deposit identification number

II. Payee bank identification number

III. Federal Reserve bank code

IV. Payor's account number

ACCOUNTS RECEIVABLE AT THE END OF MARCH

On the basis of the accounts receivable balance pattern above and April sales of $600, the cash flow forecast for April is:

Which of the following would be used to evaluate only the effects of varying interest rates while holding all other values constant at their expected levels?

If a company’s pension plan offered its executives the right to contribute a greater percentage of their salary to the plan than the percentage offered to other employees, it would be at risk of violating the ERISA nondiscrimination rule related to what?

A company's accounts receivable balance pattern is shown in the first table. Credit sales are shown in the second table.

What is the cash inflow for the month of August?

Which cost benefit analysis technique uses the methodology to find where the present value of each project’s cash inflows equals the present value of each project’s outflows?

All of the following would encourage a company operating nationwide to develop multiple banking relationships EXCEPT:

From a consumer's perspective, all of the following are true of both debit cards and credit cards EXCEPT:

The mix of long-term debt and equity refers to a company’s:

Which of the following are reasons for companies to use controlled disbursement?

I. To obtain timely check presentment information

II. To enhance supplier relationships

III. To increase their available cash

IV. To improve their overall creditworthiness

Which of the following is a disadvantage of e-commerce?

A new retail chain has decided to offer 3 payment methods: cash, cards and checks. It was determined that card payments would be the biggest sales driver and projects have been scheduled accordingly. To be in line with this strategy, which of the following should be the priority?

A merchant, wanting to accept credit cards as payment method, will negotiate its fees with which of the following participants?

Trade terms are renegotiated under e-commerce in order to:

With the advent of the euro, many U.S. companies have seen a reduction in their number of foreign currency transactions. As a result, these U.S. companies have benefited from which of the following?

I. Reduced FX transaction costs

II. Consolidated banking relationships

III. Simplified exchange risk management

IV. Reduced need to monitor foreign political climates

Which of the following correctly describes pooling as practiced in the European cash management environment?

"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:

Given a corporate tax rate of 34%, a tax-exempt yield of 7% is equivalent to a taxable yield of:

A retail lockbox system is characterized by which of the following?

I. An emphasis on processing cost

II. Detailed information on discounts taken

III. Small-dollar amounts per invoice

IV. Multiple invoices per payment

Which of the following instruments is sold at multiple price bid auctions?

True statements about the open account method of trade payment include which of the following?

I. A bank guarantees payment.

II. It is the most common type of trade credit.

III. A periodic credit review of each customer is required.

IV. The customer makes equal monthly payments.

Which of the following are basic security issues to be considered in evaluating a treasury management system?

I. Data recovery

II. Anti-virus protection

III. Database access controls

IV. Data integration

An increase in the availability float on a company's collections would cause a reduction in which of the following?

I. Earnings credit

II. Ledger balance

III. Service charges

IV. Collected balance

Which of the following functions is LEAST likely to be part of a cash manager's responsibilities?

Compared to debt, which of the following statements is true about a company issuing equity?

Which of the following companies would be MOST LIKELY to use a wholesale lockbox?

A company can use all of the following documents to establish a relationship with a bank EXCEPT:

A cash manager invests in Treasury bills for which of the following reasons?

A netting system can be used for all of the following EXCEPT:

Which of the following statements is true about a forward foreign exchange contract?

Which of the following items would be classified as a source of cash on a company's statement of cash flow?

I. Selling, general, and administrative expense

II. Increase in accounts payable

III. Increase in inventory

IV. Depreciation expense

A grocery store chain would be likely to use all of the following services EXCEPT:

A major toy retailer operates 65 retail stores throughout the Midwest. Which of the following credit terms is MOST LIKELY to be offered to this company by its suppliers?

The yield on any short-term investment instrument is a function of the maturity or holding period, the amount paid and:

Which of the following is NOT true for both bankers’ acceptances and trade acceptances?

Company XYZ has an underfunded defined benefit plan. Company XYZ is required to provide filings for this plan to all of the following EXCEPT:

When company profits are high, what is the MOST LIKELY way management will prefer to finance growth?

All of the following are examples of treasury management system transactions for liquidity management EXCEPT:

XYZ Inc. is a publicly traded company with revenues of $1B and an operating profit of 7.5%. The treasury organization consists of a treasurer and an assistant treasurer. The assistant treasurer is responsible for the creation and approval of all payments. The treasurer is responsible for compilation of the financial statements. Under Section 404 of the Sarbanes-Oxley Act, what should be viewed as a concern?

Simplifying upgrades and system restoration, access from multiple remote locations, and interfacing with multiple applications are all reasons to:

Which of the following is a characteristic of MOST mutual funds?

A-Plus Company has made arrangements for a new insurance broker to provide products to its employees. Historically, A-Plus Company’s employees made insurance payments via payroll deduction, but the new broker will be collecting payments from employees directly. What will the broker MOST LIKELY use to minimize collection float?

A company is evaluating its employee healthcare expense and payroll applications. If the company wishes to provide maximum convenience to its employees, which payment method is the BEST choice?

Company XYZ had the following sales over the last 5 years:

The company raised funds to invest in its operations. Considering the company’s growth, it is interested in future options that will allow it to maintain its debt level and keep debt costs low. The company is not concerned about changes to the working capital structure. Which security did the company issue?

Securities sold by companies in an initial public offering (IPO) arE.

A nationwide discount retailer is re-evaluating financing methods since the most-popular and most-expensive electronics “must-have” item for this year is set to ship from factories in China. Which of the following credit facilities would be MOST effective for the retailer to use?

An employee earning $80,000 per year decides to begin contributing to his company’s 401(k) plan effective January 1st. Assuming he is in the 25% tax bracket, contributes 15% of his pay into the plan each month and receives a company match of $0.50 for every dollar he contributes, what is his taxable compensation that year?

Recently LEW Utilities, a local utility company, began using the company processing center method to process customer payments. Prior to this change, it used its local depository bank’s lockbox to process the payments. The PRIMARY advantage of the new method is to:

Treasury management systems and ERP systems allow companies to do all of the following EXCEPT:

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

The KEY decision in using CCD+ and CTX formats for B2B payments is:

A company hires an investment firm to fully underwrite a new stock issuance. Which of the parties carries the MOST risk?

A call option for a company has an exercise price of $50. The stock is currently trading at $60. At maturity, what should an investor who paid $3 for the option do?

A public company’s risk profile is currently in balance. The management’s 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 large mature company with limited growth opportunities (positive NPV projects) achieved abnormally high profits this year. After paying mandatory principal, interest, and taxes, the company has $200 million in surplus cash on hand. Assuming its investor base is most concerned with capital appreciation, which of the following is the BEST option for the company?

An analyst for a landscaping company wants to adjust her cash-flow forecast to account for the seasonality of outflows. How can this be accomplished?

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

Company A is a large public company with annual revenue of $1.2 billion and high fixed costs. Its stock is listed on the New York Stock Exchange. Company B is a mid-sized company with annual revenue of $100 million and low fixed costs. Its stock is listed on the NASDAQ. Which of the following statements is MOST LIKELY to be true when comparing Company A and Company B?

A bank issues a letter of credit (L/C) and receives a request for payment under the L/C. The buyer notifies the issuing bank not to make payment because there is a dispute over the quality of the merchandise. However, the documents received fully comply with the terms of the L/C. Which of the following statements is true?

A company transmits a payment file of ACH and Fedwire vendor payments to its financial institution to execute. Which article of the Uniform Commercial Code governs these payments?

For a defined benefit plan,

A buyer receives an invoice from a supplier that offers discount terms of 3/10, net 60. What is the effective cost of discount?

Which function involves evaluating alternative projects in relation to one another and in relation to the company's cost structure?

Company X has a rating that is below investment grade. The treasurer would prefer to use commercial paper for its short-term financing needs and has a commitment from its bank to provide a standby letter of credit. What costs would be associated with this process?

Which of the following is true when a company purchases goods using trade credit from suppliers?

The principal roles of corporate finance include which one of the following combination of functions?

The exchange of a fixed interest rate cash flow for a floating interest rate cash flow with both interest rates in the same currency is an example of:

A company invests all of its short-term excess cash in T-bills on a daily basis. To prevent delays in processing its outgoing wire transfers, the company may ask its cash management bank to establish a:

A company has negotiated a credit facility with the following terms:

• $5,000,000 line of credit
• $3,000,000 average borrowing
• 30 basis point commitment fee on the unused portion of the line
• Interest rate on advances is 1-month LIBOR plus 4%
• 1-month LIBOR is currently 2%

What is the annual interest rate on the line of credit?

In order to be defined as independent, a corporate director:

The combination of difference in condition (DIC) insurance and umbrella insurance:

A shareholder right found in many corporate charters is the preemptive right which provides:

In an organization with personnel limitations, which of the following strategies should be considered to mitigate cash management system risk?

A multinational company owns a United Kingdom subsidiary that has total assets equal to £1 million and intercompany loans due to the parent company equal to $1 million. It would like to undertake a balance sheet hedge of the U.K. subsidiary’s GBP liability because it expects a depreciation of the pound. Given these circumstances, which of the following actions would be appropriate?

The term "factoring" refers to a:

Which of the following objectives of treasury management refers to a company’s ability to meet current and future financial obligations in a timely, efficient, and cost-effective manner?

Company ABC has recently started to experience a significant reduction in funds availability. Which of the following is MOST LIKELY to reduce funds availability?

Since the inception of ABC Company's pension plan, 1,500 employees qualified and were paid pensions of $500 million after retirement, of which 700 employees were those who earned $110,000 or more and received $200 million in pension benefits. When the company filed for bankruptcy in 2010, the IRS claimed back taxes from the company stating that the pension plan was not qualified under ERISA. On what basis was the IRS MOST LIKELY making its claim?

Traditionally the primary source of operating risk in the area of external theft or malfeasance has been related to:

Which of the following techniques would MOST accurately predict a company's daily cash position?

Which of the following is NOT a component of the operating cycle?

A large multinational company with multiple autonomous operational entities is MOST LIKELY to operate.

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

A small group of investors is purchasing a company using a large amount of debt. This group is intending to sell off pieces of the acquired company to other firms that it believes can take advantage of potential synergies. What is this type of a transaction more specifically known as?

When will a depositor receive ledger and collected credit for a western check deposited at 2:00 P.M. Wednesday?

Ledger Credit - Collected Credit