FREE Certified Treasury Professional MCQ Questions And Answers

Question 1

Which of the following market-traded derivative contracts poses the LEAST risk to the contracting parties in terms of counterparty risk?

Accepted Answer

exchange-traded options

Answer

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.

Question 2

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?

Accepted Answer

The Matching Principle

Answer

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.

Question 3

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?

Accepted Answer

$505,000

Answer

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

Question 4

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.

Accepted Answer

$7,711.00

Answer

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

Question 5

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?

Accepted Answer

Scenario analysis

Answer

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.

Certified Treasury Professional Exam Practice Test

Certified Treasury Professional Exam Practice Test

FREE Certified Treasury Professional MCQ Questions And Answers