A French exporter sells goods to a foreign buyer in euros and wants to guarantee that payment is made by the buyer. The exporter would MOST LIKELY require a(n):

The right of stockholders to purchase, on a pro-rata basis, any new shares issued by the company is referred to as:

After a recent review of its insurance policies, a petroleum products company determines it needs to re-evaluate its risk exposure to potentially reduce its insurance premiums. The company has operated in two locations for 20 years but only produces and stores petroleum at one location. In doing so, the risk manager determines the following exposures: ·        The number of employee workers compensation claims due to injuries while loading trucks has increased 25% in the past 12 months ·        The primary tank used for petroleum storage is 13 years old and standard life of tanks of this model is 20 years ·        There is only one road into the current petroleum storage facility Given the above information, if the risk manager constructs a second road into the petroleum storage facility, what risk management strategy is being used?

Which of the following contributes MOST to the marketability of a security?

A large, mature, diversified and publicly traded company sells the smallest of its business segments to a strategic buyer for cash. It uses the proceeds to pay off all bank debt and subordinated debenture debt on its books. The company believes the stock is trading at a reasonable price and continues to pay a regular, steady dividend to shareholders. Management’s strategy is to embark on an aggressive growth plan including a major acquisition. Based on the above information, if the company uses the trade-off theory in considering its WACC, how will it finance its growth?

The treasury manager of a privately held company is looking to finance new equipment that has a useful life of 5 years. What type of financing would the Treasury Manager MOST LIKELY employ to finance the equipment?

A retail brokerage firm is MOST like which one of the following types of financial institutions?

A U.S. company has a secured committed line of credit of $5.5 million and has an available balance of $4 million. The company successfully transmitted a $5.5 million wire transfer instruction out to the bank via SWIFT. The bank contacted the company and informed it that the wire transfer would not be processed. What is the MOST LIKELY reason the bank gave the company?

A large retailer is preparing to accept credit cards and anticipates monthly credit card sales of $1,000,000. If the terms with the acquiring bank include bundled allocated fees of 6% and the retailer wishes to delay fee payment as long as possible, what should the retailer do?

Examples of traditional factors used in making a credit decision include which of the following? I. Capacity II. Capital III. Compliance IV. Character

French corporation purchases finished products from a U.K. subsidiary and sells raw materials to the subsidiary several times in one month. To minimize foreign exchange transaction costs, the French corporation’s cash manager would MOST LIKELY use:

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

ABC Company, a leading provider of office supplies, has successfully implemented EDI based on a request from one of its customers. ABC will not only benefit from the strategic alliance that will result, but as more of ABC’s customers adopt the program, ABC will also experience a positive impact on its:

A company has asked its marketing, payroll and sales teams to collaborate in finding a solution that could augment its customer base, reduce payroll cost and increase sales. The solution has to be market ready. Which of the following will serve all 3 purposes?

A portfolio manager purchases a floating rate mortgage-backed security that would currently provide a 4% yield to the company. Since mortgage rates have been fluctuating significantly over the past month, the manager is thinking about entering into an interest rate swap to hedge against the rate movements. Although the manager would remove most of the price sensitivity of the asset by executing the swap, it would also lower the total yield on the investment due to swap costs. What objective in the company investment policy is guiding the portfolio manager’s decision?

MCA, Inc. upgraded the treasury workstation that had been in place for two years and used data from that 24-month period to develop a new short-term forecast. A trend factor was applied to controlled disbursements of 97% on a month-by-month basis and the variance to actual disbursements is less than 1%. Which of the following model validation techniques was utilized?

A manufacturing company is working to improve its cash conversion cycle. Factory production has increased over the last year to increase inventory levels. They have an inventory turnover of 3.1 and asset turnover of 5.0. The company has a days’ payable of 30 and a days’ receivable of 60. It has started enforcing its net 30 terms and placed customers with balances outstanding more than 45 days on credit hold. As a result, the company collected receivables quicker but it suffered a 10% loss in sales. What can the company do to reduce its cash conversion cycle?

A company plans to issue additional equity within the next 12 months but needs to issue debt at a low interest rate now. Which of the following instruments would BEST meet this objective?

ABC Company offers a discount of 2/10, net 30 to its customers. ABC factored its accounts receivables with an outside vendor, under a “with recourse” arrangement. What impact might this have on the company?

The treasury manager of a chain of clothing 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 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?

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

A $100,000 T-bill currently sells for $98,600 and matures in 90 days. What is the 365 day basis yield for this investment?

A U.S. firm acquires a large U.K. manufacturer that generates high levels of cash flow in its local currency. The purchase is denominated in British pounds and is financed through the issuance of 10-year, 7.5% U.S. dollar bonds. The U.S. firm will rely entirely on the U.K. manufacturer’s cash flows to fund the interest payments on the bonds. What derivative instrument would help the U.S. firm manage its FX exposure?

Which of the following is a source of short-term financing?

Company XYZ is aggressively expanding globally. It is evaluating four markets: Latin America, Europe, Asia and Middle East. Latin America: Risk adjusted discount rate: 15%, Payback period=7 years, IRR=15% Europe: Risk adjusted discount rate: 8%, NPV=$20M Middle East: Risk adjusted discount rate: 11%, IRR=12%, NPV=$5M Asia: WACC: 9%, Payback=2 yrs, IRR=8% Based on the information, which two markets will company XYZ MOST LIKELY pursue?

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

In evaluating alternative capital investments, a company should consider qualitative factors such as:

A company is experiencing the following long-term trend on a month-over-month basis: ·        Sales are increasing by $100,000, a 15% increase. ·        Accounts receivable are increasing by $5,000, a 1% increase. ·        Accounts payable are increasing by $20,000, a 4% increase. ·        Labor expenses are increasing by $40,000, a 3% increase. With all other income, expenses, long-term assets and liabilities remaining stable, this trend would MOST LIKELY prompt what action by the company?

Company S wants to issue $25,000,000 of commercial paper at a discount of 35 bps and a maturity of 27 days. The dealer fee is 10 bps annually and the bank assesses a backup L/C fee of 20 bps. What is the approximate annual interest rate the company pays for this issue of commercial paper?

The stock of a manufacturing company is priced so that its expected rate of return is below its required rate, as calculated by the Capital Asset Pricing Model (CAPM). Which of the following will occur in an efficient capital market?

An intern was hired by the VP of Accounts Payables to process the electronic payments that come through the bank. The intern is responsible for manually entering payee information into the system at each step of the process. The VP directed the intern to enter the information as fast as possible without mistakes to optimize the number of transactions that could be processed. Instead of manually entering information the VP should have utilized:

XYZ Company has a well established commercial paper (CP) program that they use to fund operations. The company is expanding by purchasing a new factory. The CFO is worried about the time and expense needed to issue long-term debt and decides to use the funds they raise in the CP market to pay for the purchase of the factory. This strategy will be successful if:

A properly designed concentration system will potentially achieve which of the following results? I. Increased authority to field offices II. Increased investment income III. Improved ability to take discounts IV. Reduced dependence on third-party concentration vendors

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

Company X, a Singapore based multi-national, is exploring the option of locating a subsidiary in another country where there has been some historical risk of expropriation of local assets of foreign corporations. Therefore, as part of the risk assessment process the company must specifically quantify the:

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

As an internal control tool, what does the matching of an invoice to the original purchase confirm?

Loss exposures related to treasury management may include which of the following?

The key parties involved in a disaster recovery plan are generally classified as internal resources or external counter parties. When evaluating the risks of both parties, which of the following can be assumed?

A publicly traded company is looking to fund its next project with the issuance of stock. The company’s stock is primarily held by a small group of investors. The company is concerned that issuing stock may upset these investors because it would dilute their holdings. Which of the following strategies would help address the investors’ concern?

Company Q has average daily credit sales of $15,875.00. The daily cash sales are $8,750.00. The AR ending balance for June 30 is $387,500.00. What is the average days’ sales outstanding for Company Q?

Which of the following is subject to transaction risk exposure?

A put option on a company’s stock has an exercise price of $20. On the delivery date, the stock is trading at $24 per share. What should the investor who has paid $2 for the option do?

Making payments through electronic payments networks can be a part of a treasury management system’s functionality, but it is subject to numerous constraints. Which of the following is a true statement of those constraints?

A main characteristic of a company with regional offices using a centralized treasury function is:

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

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

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?

A merchant presents 2 different batches of credit card transactions for processing, each batch has the same dollar value and number of transactions, but the fees are different. Which of the following explains why?

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

XYZ Company has decided to purchase a close competitor. This acquisition would make XYZ Company the 4th largest in its industry allowing it better purchasing power and greater distribution channels. After completing the M&A analysis, it is determined that the combined companies would produce a 40% increase in revenue, reduce manufacturing costs by 30%, but would increase current liabilities by 27%. Which of the following would keep the acquisition from happening?

Amalgamated Binding Consolidators takes 20 days to convert its raw materials to finished goods, 5 days to sell it, and 15 days to collect its credit sales. What is the company’s days receivable period?