CGFO Treasury Operations & Cash Management 3

Question 1

Which of the following BEST describes the 'benchmark' used in evaluating a government investment portfolio's performance?

Accepted Answer

A market index with a duration and risk profile comparable to the portfolio's investment policy

Answer

A valid benchmark must reflect a similar duration and risk profile to the portfolio so performance comparisons are meaningful and fair.

Question 2

A government's investment policy statement (IPS) should PRIMARILY establish:

Accepted Answer

Objectives, permitted investments, risk parameters, and reporting requirements

Answer

An IPS provides the governance framework by defining investment objectives, authorized instruments, risk tolerances, and reporting obligations.

Question 3

What is the primary purpose of a government's cash flow forecast in treasury management?

Accepted Answer

To determine the timing and amounts of investable cash to optimize liquidity and yield

Answer

Cash flow forecasting enables the treasury officer to identify when funds are available for investment and for how long, balancing liquidity needs with yield optimization.

Question 4

Under the prudent investor standard applicable to public funds, the treasury officer is required to:

Accepted Answer

Exercise the judgment and care of a prudent person managing funds for the benefit of others

Answer

The prudent investor standard requires the exercise of reasonable care, skill, and caution consistent with managing funds for the benefit of others.

Question 5

Which type of collateral arrangement for public deposits provides the STRONGEST protection to the government entity?

Accepted Answer

Collateral held by a third-party custodian in the government's name

Answer

Third-party custodial arrangements ensure collateral is segregated and controlled by an independent party in the government's name, providing the strongest protection.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Treasury Operations & Cash Management 3