AFP AFP Investment Portfolio Management

Question 1

Which investment policy statement component defines the acceptable range of risk a corporate treasury can assume?

Accepted Answer

Risk tolerance

Answer

Return objectives

Answer

Liquidity requirements

Answer

Time horizon

Question 2

What is the primary purpose of laddering a fixed-income portfolio for a corporate treasury?

Accepted Answer

To smooth reinvestment risk over time

Answer

To maximize current yield

Answer

To eliminate credit risk

Answer

To concentrate in short-duration bonds

Question 3

Under AFP guidelines, which metric best measures the total return of a short-term investment portfolio?

Accepted Answer

Total return (income + price appreciation)

Answer

Current yield only

Answer

Coupon rate

Answer

Par value change

Question 4

Which type of U.S. government security is most commonly used by corporate treasury to meet liquidity needs?

Accepted Answer

Treasury bills (T-bills)

Answer

30-year Treasury bonds

Answer

TIPS

Answer

Agency mortgage-backed securities

Question 5

What does duration measure in a fixed-income investment?

Accepted Answer

Sensitivity of price to interest rate changes

Answer

Time until the bond matures

Answer

Coupon payment frequency

Answer

Issuer credit quality

Question 6

Which benchmark is most appropriate for evaluating a corporate short-term investment portfolio?

Accepted Answer

90-day T-bill index

Answer

S&P 500

Answer

10-year Treasury yield

Answer

High-yield bond index