CGFO Treasury Operations & Cash Management 5

Question 1

A zero-balance account (ZBA) structure in government banking is designed to:

Accepted Answer

Automatically sweep subsidiary account balances to a master concentration account daily

Answer

A ZBA automatically sweeps funds to or from a master account to maintain a zero balance in subsidiary accounts, centralizing cash for investment and reducing idle balances.

Question 2

Which scenario represents an appropriate use of an interest rate swap for a government entity?

Accepted Answer

Converting variable-rate debt to fixed-rate to reduce budget uncertainty and interest rate risk

Answer

Governments may use interest rate swaps to convert variable-rate debt to fixed-rate, providing budget certainty and managing interest rate exposure.

Question 3

What is the significance of 'value date' in government wire transfer operations?

Accepted Answer

The date on which funds are actually available and the transaction settles

Answer

The value date is the date on which the wire transfer funds become available to the recipient and the transaction is considered fully settled.

Question 4

A treasury officer is evaluating whether to use a broker-dealer for investment transactions. GFOA best practices recommend the government:

Accepted Answer

Maintain a list of approved broker-dealers selected through a competitive process

Answer

GFOA recommends maintaining an approved broker-dealer list established through a competitive process, with periodic review of each firm's qualifications.

Question 5

Under the GFOA's recommended disclosure practices, a government's investment report to the governing body should include:

Accepted Answer

Portfolio composition, maturity schedule, earnings, compliance with policy, and market value

Answer

A comprehensive investment report provides the governing body with portfolio composition, maturity structure, earnings, policy compliance status, and current market values.

(CGFO) Certified Government Finance Officer Practice Test

(CGFO) Certified Government Finance Officer Practice Test

CGFO Treasury Operations & Cash Management 5