CCM Investment and Short-Term Financing 4

Question 1

Which portfolio strategy involves maintaining a consistent allocation across multiple maturity buckets regardless of interest rate forecasts?

Accepted Answer

Laddering

Answer

A laddered portfolio staggers maturities so that a portion of the portfolio matures regularly, reducing reinvestment and liquidity risk.

Question 2

A money market fund that 'breaks the buck' means its NAV has fallen below:

Accepted Answer

$1.00 per share

Answer

Money market funds target a stable $1.00 NAV; breaking the buck means the fund's assets can no longer support this price.

Question 3

Under SEC Rule 2a-7, government money market funds must hold at least what percentage of assets in daily liquid assets?

Accepted Answer

10%

Answer

Rule 2a-7 requires government money market funds to maintain at least 10% of total assets in daily liquid assets.

Question 4

Which of the following best describes the 'barbell' investment strategy?

Accepted Answer

Concentrating investments at both very short and very long maturities

Answer

A barbell concentrates assets at the two extremes of the maturity spectrum, combining liquidity from short-term holdings with yield from longer-term holdings.

Question 5

Factoring differs from accounts receivable pledging primarily because in factoring:

Accepted Answer

The factor purchases the receivables outright and assumes credit risk

Answer

In factoring, the factor buys the receivables, takes on credit risk, and handles collections, whereas pledging keeps receivables on the borrower's books.

(CCM) Certified Cash Manager Practice Test

(CCM) Certified Cash Manager Practice Test

CCM Investment and Short-Term Financing 4