Certified Treasury Professional Exam Short-Term Investing and Borrowing 2

Question 1

A company's investment policy statement (IPS) for short-term investments typically prioritizes objectives in which order?

Accepted Answer

Safety, liquidity, yield

Answer

Return, liquidity, safety

Answer

Liquidity, safety, return

Answer

Yield, safety, liquidity

Question 2

An agency security issued by the Federal Home Loan Banks (FHLB) to fund short-term liquidity needs of member banks is an example of a:

Accepted Answer

Government-sponsored enterprise (GSE) discount note

Answer

U.S. Treasury bill

Answer

Municipal note

Answer

Federal funds loan

Question 3

The federal funds rate is the interest rate at which:

Accepted Answer

Depository institutions lend reserve balances to each other overnight

Answer

The Federal Reserve lends to commercial banks at the discount window

Answer

Banks charge their most creditworthy corporate borrowers

Answer

The U.S. Treasury auctions new T-bills

Question 4

A revolving credit facility that can be drawn as either a traditional loan or used to support commercial paper issuance is known as a:

Accepted Answer

364-day facility

Answer

Term loan B

Answer

Swingline facility

Answer

Bridge loan

Question 5

Which yield calculation method for short-term instruments accounts for the compounding effect of reinvesting interest at maturity?

Accepted Answer

Effective annual yield (EAY)

Answer

Discount yield

Answer

Bond-equivalent yield

Answer

Simple interest yield

Question 6

In a bankers' acceptance (BA) transaction, the bank that stamps 'accepted' on the draft is:

Accepted Answer

Primarily liable for payment at maturity

Answer

The exporter presenting the draft

Answer

A third-party guarantor with no credit obligation

Answer

Acting only as a paying agent with no credit risk