Certified Treasury Professional Exam Short-Term Investing and Borrowing 3

Question 1

Under a securities lending program, the cash collateral received by the lender is typically reinvested in:

Accepted Answer

Short-term, high-quality money market instruments

Answer

Long-term corporate bonds

Answer

Equities of the borrower

Answer

Real estate investment trusts

Question 2

A company borrows $10 million under a revolving credit facility with a commitment fee of 25 bps on the undrawn portion. If $4 million is drawn, the annual commitment fee is based on:

Accepted Answer

$6 million undrawn balance

Answer

$10 million total commitment

Answer

$4 million drawn amount

Answer

$14 million total exposure

Question 3

Which short-term investment is NOT subject to federal income tax at the investor level for U.S. taxable entities?

Accepted Answer

Municipal notes

Answer

Commercial paper

Answer

Treasury bills

Answer

Eurodollar deposits

Question 4

A treasury manager evaluating credit risk in the short-term investment portfolio should primarily assess the issuer's:

Accepted Answer

Short-term credit ratings from NRSRO agencies and financial ratios

Answer

Historical stock price volatility

Answer

Long-term strategic growth plans

Answer

Dividend payout history

Question 5

The SOFR (Secured Overnight Financing Rate) replaced LIBOR as the preferred reference rate for floating-rate instruments primarily because SOFR is:

Accepted Answer

Based on actual repo transactions and is transactions-based

Answer

Based on unsecured interbank estimates and easier to manipulate

Answer

Set by the Federal Reserve directly

Answer

A forward-looking term rate published daily by ICE

Question 6

When a company draws on its revolving credit facility to fund seasonal working capital needs and plans to repay within six months, the borrowing is classified on the balance sheet as:

Accepted Answer

Current liability, reflecting expected repayment within one year

Answer

Long-term debt due to the multi-year commitment period

Answer

Off-balance-sheet contingency

Answer

Equity financing