Free Certified Treasury Professional Questions And Answers — Questions and Answers
Question 1: The majority of the above are treasury management duties, EXCEPT:
- managing risk
- collecting and presenting financial information (Correct answer)
- investing for short and long-term needs
- maintaining liquidity
Correct answer: collecting and presenting financial information
All of the aforementioned tasks fall under the purview of treasury management, with the exception of gathering and presenting financial data, which is of an internal nature and is thus the responsibility of the controller. In contrast, treasury management, which focuses mostly on external finance issues, is responsible for maintaining liquidity, managing risk, and investing for both short- and long-term needs.
Question 2: The company's treasury management function has the following requirements in order to operate effectively:
- have collaborative relationships with departments internal to the company such as purchasing and accounting, as well as with various outside financial institutions and agencies. (Correct answer)
- have extensive internal collaboration with other departments within the company.
- limit its internal collaboration to only those with accounting-related functions within the company.
- have external collaborations involving interactions with financial institutions, rating agencies and legal counsel.
Correct answer: have collaborative relationships with departments internal to the company such as purchasing and accounting, as well as with various outside financial institutions and agencies.
The company's treasury management function must maintain relationships and work in tandem with BOTH its internal divisions, such as purchasing, risk management, and tax, as well as external groups, such as investment managers, regulatory bodies, and legal counsel, in order to function effectively.
Question 3: Which of the following, in relation to treasury management, best describes the phrase "benchmarking"?
- A company seeks to improve its efficiency and productivity, and moves to entirely redesign its business processes.
- A company researches other successful companies for the purpose of examining what they do and its treasury management processes to theirs, in the hope of identifying “best practices” that it can recreate and benefit from. (Correct answer)
- A company combines with another so as to have only the acquiring company retain its legal identity, along with the downsizing or potential elimination of one of the two companies’ treasury operations.
- A company looks to have a third party take on, in whole or in part, its treasury functions.
Correct answer: A company researches other successful companies for the purpose of examining what they do and its treasury management processes to theirs, in the hope of identifying “best practices” that it can recreate and benefit from.
Benchmarking is the process through which a business searches out other prosperous businesses in order to uncover ""best practices,"" copy their procedures, and profit from their proven success. When a corporation outsources a task, a third party takes over that task on its behalf. Reengineering is the process by which a business redesigns its operational procedures to achieve greater efficiencies. When two or more businesses come together to form one legal entity, it is called a merger.
Question 4: The following consequences on the economy result from Federal Reserve (Fed) action to increase the discount rate, WITH the exception of:
- The higher cost of credit is imposed on consumers, which results in a slowing of their rate and level of borrowing.
- The level of growth as related to the money supply becomes more limited.
- The new rate provides an increase in the level of borrowing due to banks lowering their rates for providing credit to consumers. (Correct answer)
- The cost of credit increases for banks, thus raising the rates they set for their own lending to consumers.
Correct answer: The new rate provides an increase in the level of borrowing due to banks lowering their rates for providing credit to consumers.
With the exception of ""The new rate provides an increase in the level of borrowing due to banks lowering their rates for providing credit to consumers."" which is actually the outcome of the Fed lowering the discount rate, all of the aforementioned are effects of the Fed raising the discount rate.
Question 5: What banking rules of the Federal Reserve Board apply to consumers who use different types of credit and lending in an educated manner?
- Regulation D
- Regulation E
- Regulation J
- Regulation Z (Correct answer)
Correct answer: Regulation Z
The Truth in Lending Act of 1968's Regulation Z relates to customers using credit responsibly. The Electronic Funds Transfer Act of 1978 is covered by Regulation E, check collection and settlement is covered by Regulation J, and reserve requirements for all depository institutions are established by Regulation D.
Question 6: What services do investment banks with headquarters in the United States offer?
- They underwrite an issuance of securities by a company to be sold to the public, and act as an advisor to their institutional clients. (Correct answer)
- They act as agents to provide commercial paper to investors and facilitate the purchase of municipal securities.
- They operate in multiple countries, primarily with international corporations, providing foreign exchange and transaction services.
- They offer a full range of financial services, including personal savings accounts and consumer lending.
Correct answer: They underwrite an issuance of securities by a company to be sold to the public, and act as an advisor to their institutional clients.
Investment banks with headquarters in the United States generally support merger and reorganization activities, underwrite securities issuance, and maintain broker relationships with their institutional clients. Providing consumer deposit accounts and lending are credit unions' main priorities. The goal of U.S. commercial banks is to make it easier for investors to buy municipal and commercial paper. With the exception of the fact that they primarily act globally, global (non-U.S.) financial institutions work globally with multinational firms and offer services that are comparable to those offered by investment banks with U.S. bases.
Question 7: The following is the name of the document that gives permission for a company representative to work with a financial institution to obtain financial services:
- account resolution (Correct answer)
- signature card
- service agreement
- service level agreement
Correct answer: account resolution
A corporate representative may enter into a contract with the financial institution with the help of the account resolution. What is expected and necessary in terms of the service connection between the business and a financial institution is laid forth in the service agreement. The service level agreement specifies the benchmark service requirements that the contracting financial institution must meet and the consequences of not doing so. The signature card gives the bank all of the company's authorized signers whose signatures are necessary for carrying out the contracted business.
Free Certified Treasury Professional Questions And Answers
The majority of the above are treasury management duties, EXCEPT: