FIN3703: CORPORATE TREASURY MANAGEMENT
ASSIGNMENT 01 2023 (69330)
QUESTION 1
Treasury management is executed in any business, irrespective of its size, structure or
industry. Which one of the following statements does NOT apply in the definition of corporate
treasury management?
a. Management of cash, liquidity, and risk exposure.
b. Management of foreign currency and cash flow.
c. Setting strategic organisational goals and objectives.
d. Management of cash surplus and cash deficit.
The correct answer is c)
Setting strategic organizational goals and objectives. While treasury management may
contribute to achieving an organization's strategic goals and objectives, it is not primarily
responsible for setting them. Corporate treasury management is primarily concerned with
managing the organization's cash, liquidity, and financial risks, including managing foreign
currency and cash flow, and managing cash surplus and cash deficit.
QUESTION 2
The key activities of treasury management include all of the following, EXCEPT …
a. collection of cash.
b. investment of cash deficit.
c. disbursement of cash.
d. profit and price determination
a. a b
a. b d
b. a c d
c. a b c
The key activities of treasury management include:
• Collection of cash: This involves managing the inflow of cash into the organization from
various sources.
• Investment of cash surplus: This involves managing the organization's cash resources
to ensure that there is always enough cash available to meet its financial obligations.
, • Disbursement of cash: This involves managing the outflow of cash from the
organization to various stakeholders, such as suppliers, employees, and lenders.
Profit and price determination are not directly related to treasury management. While treasury
management may impact the organization's profitability indirectly through its management of
cash and financial risk, it does not involve direct responsibility for determining profits or prices.
QUESTION 3
One of the primary objectives of treasury management is to manage risk efficiently. The key
risks to which treasury is exposed can be grouped under the following categories …
a. liquidity risk, financial market risk, operational risk, and counterparty risk.
b. project risk, liquidity risk, financial market risk, technical risk.
c. liquidity risk, financial market risk, operational risk and technical risk.
d. technical risk, project risk, liquidity risk and financial risk.
The correct answer is a) liquidity risk, financial market risk, operational risk, and counterparty
risk. These four categories are the primary risks that treasury management aims to manage
effectively.
• Liquidity risk refers to the risk of not having enough cash or cash equivalents to meet
the organization's financial obligations when they become due.
• Financial market risk refers to the risk of losses resulting from changes in interest rates,
foreign exchange rates, commodity prices, and other financial variables.
• Operational risk refers to the risk of losses resulting from inadequate or failed internal
processes, people, and systems, or from external events.
• Counterparty risk refers to the risk of losses resulting from the failure of a counterparty
to honor its financial obligations.
QUESTION 4
A business that conducts its operations locally, with no international transactions, will not be
exposed to … risk.
a. liquidity
b. interest rate
c. operational
d. foreign exchange
The correct answer is d) foreign exchange risk.
Foreign exchange risk arises from fluctuations in foreign exchange rates, which can affect the
value of an organization's assets and liabilities denominated in foreign currencies. If a
business conducts its operations solely within its local market and does not engage in
ASSIGNMENT 01 2023 (69330)
QUESTION 1
Treasury management is executed in any business, irrespective of its size, structure or
industry. Which one of the following statements does NOT apply in the definition of corporate
treasury management?
a. Management of cash, liquidity, and risk exposure.
b. Management of foreign currency and cash flow.
c. Setting strategic organisational goals and objectives.
d. Management of cash surplus and cash deficit.
The correct answer is c)
Setting strategic organizational goals and objectives. While treasury management may
contribute to achieving an organization's strategic goals and objectives, it is not primarily
responsible for setting them. Corporate treasury management is primarily concerned with
managing the organization's cash, liquidity, and financial risks, including managing foreign
currency and cash flow, and managing cash surplus and cash deficit.
QUESTION 2
The key activities of treasury management include all of the following, EXCEPT …
a. collection of cash.
b. investment of cash deficit.
c. disbursement of cash.
d. profit and price determination
a. a b
a. b d
b. a c d
c. a b c
The key activities of treasury management include:
• Collection of cash: This involves managing the inflow of cash into the organization from
various sources.
• Investment of cash surplus: This involves managing the organization's cash resources
to ensure that there is always enough cash available to meet its financial obligations.
, • Disbursement of cash: This involves managing the outflow of cash from the
organization to various stakeholders, such as suppliers, employees, and lenders.
Profit and price determination are not directly related to treasury management. While treasury
management may impact the organization's profitability indirectly through its management of
cash and financial risk, it does not involve direct responsibility for determining profits or prices.
QUESTION 3
One of the primary objectives of treasury management is to manage risk efficiently. The key
risks to which treasury is exposed can be grouped under the following categories …
a. liquidity risk, financial market risk, operational risk, and counterparty risk.
b. project risk, liquidity risk, financial market risk, technical risk.
c. liquidity risk, financial market risk, operational risk and technical risk.
d. technical risk, project risk, liquidity risk and financial risk.
The correct answer is a) liquidity risk, financial market risk, operational risk, and counterparty
risk. These four categories are the primary risks that treasury management aims to manage
effectively.
• Liquidity risk refers to the risk of not having enough cash or cash equivalents to meet
the organization's financial obligations when they become due.
• Financial market risk refers to the risk of losses resulting from changes in interest rates,
foreign exchange rates, commodity prices, and other financial variables.
• Operational risk refers to the risk of losses resulting from inadequate or failed internal
processes, people, and systems, or from external events.
• Counterparty risk refers to the risk of losses resulting from the failure of a counterparty
to honor its financial obligations.
QUESTION 4
A business that conducts its operations locally, with no international transactions, will not be
exposed to … risk.
a. liquidity
b. interest rate
c. operational
d. foreign exchange
The correct answer is d) foreign exchange risk.
Foreign exchange risk arises from fluctuations in foreign exchange rates, which can affect the
value of an organization's assets and liabilities denominated in foreign currencies. If a
business conducts its operations solely within its local market and does not engage in
