CTP PRACTICE EXAM WITH
DETAILED VERIFIED ANSWERS
(100% CORRECT ANSWERS)
A cash manager at a retailer forecasts a positive collected
cash position for the end of the current day. The company
has an overdraft facility at 10%, a separate investment
account earning 8% before taxes, an earnings credit rate
of 8% and an outstanding single payment note at 9.5%
maturing in 1 week. This month's bank service fees are
expected to exceed the earnings credit. Which of the
following intra-day options would be the MOST
economically positive for the company?
A. Leave the funds in the account
B. Redeem the single payment note
C. Prepay administrative expenses D. Transfer funds to
the investment account - correct answer- A
A company can pay their supplier by check or by
electronic transfer. If the difference between the value
date of the payment methods is 4 days from the
company's perspective, what discount should the supplier
, offer them to get the company to pay on the same day as
they did when they paid by check (rounded to the nearest
100th percent)? Assume no difference in the cost of the
payment method, an opportunity cost of 8%, and float
neutrality.
A. 2.00% B. 0.09% C. 0.87% D. 0.02% - correct
answer- B
A company enters into a cash flow hedge to offset
fluctuations in the value of foreign currency transactions
occurring in two years. How should the company record
the gains and/or losses on the cash flow hedge in the
current year?
A. The hedged gains and losses are reported in
comprehensive income B. The hedged gains and losses
are reported in current period income C. The hedged
gains and losses are reported in current period income
together with the offsetting gains and losses of the foreign
currency D. The hedged gains and losses are reported in
comprehensive income together with the offsetting gains
and losses of the foreign currency - correct
answer- A
DETAILED VERIFIED ANSWERS
(100% CORRECT ANSWERS)
A cash manager at a retailer forecasts a positive collected
cash position for the end of the current day. The company
has an overdraft facility at 10%, a separate investment
account earning 8% before taxes, an earnings credit rate
of 8% and an outstanding single payment note at 9.5%
maturing in 1 week. This month's bank service fees are
expected to exceed the earnings credit. Which of the
following intra-day options would be the MOST
economically positive for the company?
A. Leave the funds in the account
B. Redeem the single payment note
C. Prepay administrative expenses D. Transfer funds to
the investment account - correct answer- A
A company can pay their supplier by check or by
electronic transfer. If the difference between the value
date of the payment methods is 4 days from the
company's perspective, what discount should the supplier
, offer them to get the company to pay on the same day as
they did when they paid by check (rounded to the nearest
100th percent)? Assume no difference in the cost of the
payment method, an opportunity cost of 8%, and float
neutrality.
A. 2.00% B. 0.09% C. 0.87% D. 0.02% - correct
answer- B
A company enters into a cash flow hedge to offset
fluctuations in the value of foreign currency transactions
occurring in two years. How should the company record
the gains and/or losses on the cash flow hedge in the
current year?
A. The hedged gains and losses are reported in
comprehensive income B. The hedged gains and losses
are reported in current period income C. The hedged
gains and losses are reported in current period income
together with the offsetting gains and losses of the foreign
currency D. The hedged gains and losses are reported in
comprehensive income together with the offsetting gains
and losses of the foreign currency - correct
answer- A
