Certified Treasury Professional (CTP)
Examination Questions And Correct
Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
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1. Which of the following standard formats is primarily used for electronic
data interchange (EDI) financial transactions in North America?
A. SWIFT MT103
B. ANSI X12
C. ISO 20022
D. NACHA ACH
Rationale: ANSI X12 is the primary EDI standard used in North America for
business-to-business transactions, including financial EDI like the 820 Payment
Order/Remittance Advice. SWIFT is global for wire transfers, ISO 20022 is an
emerging global XML standard, and NACHA governs US ACH transactions
specifically rather than general EDI.
2. A treasury manager wants to mitigate the operational risk of unauthorized
wire transfers. Which internal control mechanism provides the most
effective protection?
A. Board-approved investment policy
B. Dual authorization for all outbound transfers
C. Monthly bank reconciliation
D. Monthly disaster recovery testing
,Rationale: Dual authorization ensures that no single individual can initiate and
execute a wire transfer independently, significantly reducing the risk of fraud or
internal error. An investment policy, bank reconciliations, and disaster recovery
testing are crucial controls but do not prevent unauthorized outbound transfers
at the point of execution.
3. Under the Modified Accelerated Cost Recovery System (MACRS), what is the
typical recovery period assigned to light general-purpose trucks and
automobiles?
A. 5 years
B. 3 years
C. 7 years
D. 15 years
Rationale: Under US tax law, MACRS classifies automobiles, light general-
purpose trucks, computers, and peripheral equipment into the 5-year property
class. 3-year property includes special tools, 7-year property includes office
furniture and fixtures, and 15-year property includes land improvements.
4. A company experiences an increase in its Days Sales Outstanding (DSO)
from 35 days to 45 days. Concurrently, its Days Inventory Outstanding (DIO)
drops by 5 days, and Days Payable Outstanding (DPO) remains unchanged.
What is the net impact on the cash conversion cycle (CCC)?
A. The CCC decreases by 5 days.
B. The CCC remains unchanged.
C. The CCC increases by 5 days.
D. The CCC increases by 10 days.
Rationale: The Cash Conversion Cycle formula is CCC = DIO + DSO - DPO. Here,
DSO increased by 10 days (+10) and DIO decreased by 5 days (-5), while DPO
remained flat (0). Net change = -5 + 10 - 0 = +5 days. Thus, the CCC increased by
5 days, meaning cash is locked up longer.
, 5. Which type of risk is specifically associated with the inability to sell an asset
quickly at or close to its fair market value?
A. Credit risk
B. FX risk
C. Interest rate risk
D. Liquidity risk
Rationale: Liquidity risk in an asset context refers to the ease with which an asset
can be converted into cash without a substantial loss in value. Credit risk refers
to counterparty default, FX risk to currency fluctuations, and interest rate risk to
changes in asset valuation due to shifting yield curves.
6. What type of bank account structure allows a company to automatically
move excess funds from subsidiary accounts into a master account at the
end of each day while maintaining separate sub-account tracking?
A. Controlled disbursement account
B. Zero balance account (ZBA) network
C. Concentration account without sub-accounts
D. Lockbox processing account
Rationale: A Zero Balance Account (ZBA) automatically transfers funds to or from
a master concentration account to bring the sub-account balance to zero at the
end of the day. This optimizes interest earnings and liquidity management while
maintaining segregation of operational accounting data.
7. Which of the following short-term investment instruments represents an
unsecured promissory note issued by a corporation to finance short-term
working capital needs?
A. Banker's acceptance
B. Treasury bill
, C. Commercial paper
D. Repurchase agreement
Rationale: Commercial paper is an unsecured, short-term debt instrument issued
by corporations, typically maturing within 270 days, used to fund payroll,
accounts payable, and inventories. Banker's acceptances are time drafts
guaranteed by banks; T-bills are government-backed; repos are secured loans.
8. When assessing credit risk, which ratio measures a company’s ability to
meet its short-term obligations using only its most liquid assets, explicitly
excluding inventory?
A. Current ratio
B. Quick ratio (Acid-test ratio)
C. Debt-to-equity ratio
D. Asset turnover ratio
Rationale: The quick ratio is calculated as (Cash + Marketable Securities +
Accounts Receivable) / Current Liabilities. It explicitly excludes inventory and
prepaid expenses because they cannot be instantly converted to cash, providing
a stricter measure of short-term liquidity than the current ratio.
9. A treasury department initiates a transaction where it sells a security to a
counterparty and simultaneously agrees to buy it back at a specified higher
price on a future date. What is this transaction called from the seller's
perspective?
A. Repurchase agreement (Repo)
B. Reverse repurchase agreement
C. Commercial paper issuance
D. Banker's acceptance
Rationale: A repurchase agreement (repo) is the sale of securities combined with
a simultaneous agreement to repurchase them at a higher price in the future.
Examination Questions And Correct
Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
1. Which of the following standard formats is primarily used for electronic
data interchange (EDI) financial transactions in North America?
A. SWIFT MT103
B. ANSI X12
C. ISO 20022
D. NACHA ACH
Rationale: ANSI X12 is the primary EDI standard used in North America for
business-to-business transactions, including financial EDI like the 820 Payment
Order/Remittance Advice. SWIFT is global for wire transfers, ISO 20022 is an
emerging global XML standard, and NACHA governs US ACH transactions
specifically rather than general EDI.
2. A treasury manager wants to mitigate the operational risk of unauthorized
wire transfers. Which internal control mechanism provides the most
effective protection?
A. Board-approved investment policy
B. Dual authorization for all outbound transfers
C. Monthly bank reconciliation
D. Monthly disaster recovery testing
,Rationale: Dual authorization ensures that no single individual can initiate and
execute a wire transfer independently, significantly reducing the risk of fraud or
internal error. An investment policy, bank reconciliations, and disaster recovery
testing are crucial controls but do not prevent unauthorized outbound transfers
at the point of execution.
3. Under the Modified Accelerated Cost Recovery System (MACRS), what is the
typical recovery period assigned to light general-purpose trucks and
automobiles?
A. 5 years
B. 3 years
C. 7 years
D. 15 years
Rationale: Under US tax law, MACRS classifies automobiles, light general-
purpose trucks, computers, and peripheral equipment into the 5-year property
class. 3-year property includes special tools, 7-year property includes office
furniture and fixtures, and 15-year property includes land improvements.
4. A company experiences an increase in its Days Sales Outstanding (DSO)
from 35 days to 45 days. Concurrently, its Days Inventory Outstanding (DIO)
drops by 5 days, and Days Payable Outstanding (DPO) remains unchanged.
What is the net impact on the cash conversion cycle (CCC)?
A. The CCC decreases by 5 days.
B. The CCC remains unchanged.
C. The CCC increases by 5 days.
D. The CCC increases by 10 days.
Rationale: The Cash Conversion Cycle formula is CCC = DIO + DSO - DPO. Here,
DSO increased by 10 days (+10) and DIO decreased by 5 days (-5), while DPO
remained flat (0). Net change = -5 + 10 - 0 = +5 days. Thus, the CCC increased by
5 days, meaning cash is locked up longer.
, 5. Which type of risk is specifically associated with the inability to sell an asset
quickly at or close to its fair market value?
A. Credit risk
B. FX risk
C. Interest rate risk
D. Liquidity risk
Rationale: Liquidity risk in an asset context refers to the ease with which an asset
can be converted into cash without a substantial loss in value. Credit risk refers
to counterparty default, FX risk to currency fluctuations, and interest rate risk to
changes in asset valuation due to shifting yield curves.
6. What type of bank account structure allows a company to automatically
move excess funds from subsidiary accounts into a master account at the
end of each day while maintaining separate sub-account tracking?
A. Controlled disbursement account
B. Zero balance account (ZBA) network
C. Concentration account without sub-accounts
D. Lockbox processing account
Rationale: A Zero Balance Account (ZBA) automatically transfers funds to or from
a master concentration account to bring the sub-account balance to zero at the
end of the day. This optimizes interest earnings and liquidity management while
maintaining segregation of operational accounting data.
7. Which of the following short-term investment instruments represents an
unsecured promissory note issued by a corporation to finance short-term
working capital needs?
A. Banker's acceptance
B. Treasury bill
, C. Commercial paper
D. Repurchase agreement
Rationale: Commercial paper is an unsecured, short-term debt instrument issued
by corporations, typically maturing within 270 days, used to fund payroll,
accounts payable, and inventories. Banker's acceptances are time drafts
guaranteed by banks; T-bills are government-backed; repos are secured loans.
8. When assessing credit risk, which ratio measures a company’s ability to
meet its short-term obligations using only its most liquid assets, explicitly
excluding inventory?
A. Current ratio
B. Quick ratio (Acid-test ratio)
C. Debt-to-equity ratio
D. Asset turnover ratio
Rationale: The quick ratio is calculated as (Cash + Marketable Securities +
Accounts Receivable) / Current Liabilities. It explicitly excludes inventory and
prepaid expenses because they cannot be instantly converted to cash, providing
a stricter measure of short-term liquidity than the current ratio.
9. A treasury department initiates a transaction where it sells a security to a
counterparty and simultaneously agrees to buy it back at a specified higher
price on a future date. What is this transaction called from the seller's
perspective?
A. Repurchase agreement (Repo)
B. Reverse repurchase agreement
C. Commercial paper issuance
D. Banker's acceptance
Rationale: A repurchase agreement (repo) is the sale of securities combined with
a simultaneous agreement to repurchase them at a higher price in the future.
