FREE Certified Treasury Professional MCQ Questions And Answers
Your business has been informed of three payments: the first, for $2,500, will be made right away; the second, for $1,700, will be made at the end of the first year; and the third, for $3,100, will be made at the end of the second year. Your task is to determine how much the entire stream of payments (future value) will be worth at the conclusion of year two assuming an investment rate of 6%. Keep in mind that the third payment won't be received in time for compounding.
Future Value = $2,500 (1+1.06)2 + $1,700 (1+.06)1 + $3,100 = $2,500 (1.1236) + $1,700 (1.06) + $3,100 = $2,809 + $1,802 + $3,100 = $7,711
Which of the several investment analysis styles tries to evaluate both the best- and worst-case outcomes when various conditions are put on the variables in order to determine the worth or risk of a particular investment?
In scenario analysis, many situations are imposed on the variables, and various outcomes are evaluated (best and worst). Cost-benefit analysis is to determine whether a certain plan's economic benefits outweigh its economic costs. Sensitivity analysis examines how changes in the values of variables and various assumptions affect an outcome. Combining scenario and sensitivity analysis is simulation analysis.
Which of the following General Accepted Accounting Principles (GAAP) fundamentals states that a company's expenses must be disclosed after the revenues coming from those expenses are disclosed?
The Matching Principle mandates that after expenses are reported, they must be ""matched"" with the appropriate income. According to the revenue-recognition principle, revenues must be declared as soon as cash is received, accounts receivable are recorded, or they are materially earned through the sale of a supplied good or service. According to the full disclosure principle, all information that might have an impact on someone who refers or relies on it financially should be revealed. According to the historical-cost principle, assets and liabilities must be evaluated at their historical cost, which must be supported by a record of their previous historical worth.
There are several ways to extend credit, EXCEPT:
An open item is a procedure used by businesses to match up customers' accepted payments with their invoices that have been paid; it is not a method of extending credit. An open account is when a business issues an invoice, records the sale, and then bills the customer for additional transactions with full payment anticipated in accordance with the previously agreed-upon credit conditions. Revolving credit is when a business gives an established customer generic credit without requesting transaction-specific authorization. Purchasers who agree to make regular payments that cover both principal and interest as a way to settle their account amount are said to be using installment credit.
Debt ratios are used to assess a company's level of debt, with the exception of:
A company's ability to satisfy its current obligations, or at least have the assets to do so, is shown by its current ratio. The ratio of long-term debt to capital shows how much of the capital a corporation has in long-term debt. Debt to tangible net worth calculates debt as a proportion of total capital after adjusting equity to take into account intangible assets. The ratio of total liabilities to total assets indicates how much of a company's debt is utilized to fund its assets.
What would the calculated Net Cash total for a certain company be if the Statement of Cash Flows for that company showed the following sums?
Net Cash Increase (NCI) is equal to the sum of NC Op Act, NC Inv Act, and NC Fin Act. NCI = [($310,000) + $225] + $590,000 NCI = ($85,000) + $590,000 NCI = $505,000
Which of the following market-traded derivative contracts poses the LEAST risk to the contracting parties in terms of counterparty risk?
Because the exchange itself acts as the counterparty, exchange-traded options have the LEAST amount of counterparty risk. Dealing with one party as opposed to the exchange increases the risk for over-the-counter options, currency forwards, and interest rate swaps because they are not traded on a regulated exchange.