CGFM EXAM QUESTIONS WITH
COMPLETE ANSWERS
Cash Management Improvement Act 1990 - Answer-Improve the transfer of federal
funds
31 CFR Part 208 Management of Federal Agency Disbursements - Answer-Requires
EFT payments
Cash Management - Answer-1) mutually beneficial relationships with banks
2) collecting and recording cash
3) generating earnings from cash
4) disbursing cash
Federal Reserve System Duties - Answer-1) conducting monetary policy
2) supervising and regulating banks
3) maintaining stability of the financial system
4) providing financial services
Warrant - Answer-Drawn on the treasury of a government
Intra-bank Transfer - Answer-A request for funds to cover a Zero Balance Account
(ZBA)
Tax Reform Act of 1986 - Answer-Arbitrage (difference between interest rate paid for
fine and the interest rate earned on the same funds)
Elements of Investing - Answer-1) Safety
2) Liquidity
3) Yield
Types of Risks - Answer-1) Credit
2) Market
3) Interest Rate
4) Currency
5) Political
Treasury Bills (T-Bills) (ST) - Answer-1) less than 1 year
2) issued at a discount
3) paid face value at maturity
4) backed by government
Certificate of Deposit (CD) (ST) - Answer-A savings certificate issued by a bank,
depositing money for a specified length of time.
, Commercial Paper (ST) - Answer-Unsecured promissory notes of $100,000 and up that
mature (come due) in 270 days or less.
Banker's Acceptance (ST) - Answer-1) Guaranteed by banks to raise money against
future production or sale of goods
2) 90 days or less
3) Sold at discount to mature at par
Repurchase Agreement (ST) - Answer-Overnight loans
Short Term Mutual Funds (ST) - Answer-1) Investment Company Act of 1940
2) pools money with other investors
Short Term Investment Funds (STIF) (ST) - Answer-1) offered by large corporations
2) maturities are laddered
Bonds (LT) - Answer-Long-term liabilities that represent money lent to the firm that must
be paid back
Debentures (debt certificate) (LT) - Answer-1) backed by credit of the issuer
2) pays higher interest rate
Zero Coupon Bonds (LT) - Answer-1) no annual interest payments
2) sold at discount
3) sensitive to interest rate risk
Separate Trading of Registered Interest and Principal Securities (STRIPS) (LT) -
Answer-Book entry system operated by the Fed permitting trading and ownership of the
principal and coupon portion of Treasury securities
Fixed Income Securities - Answer-1) Short Term
2) Long Term
3) Equity
4) Mutual Fund
5) International
6) Alternative
Index Funds (Mutual) - Answer-Attempt to match the performance of a particular index
American Depository Receipts (ADRs) (International) - Answer-Certificates representing
ownership of foreign stock held in trust.
Registered with SEC
Yankee Bonds (International) - Answer-Foreign bonds denominated in US $
Issued in US by foreign banks
COMPLETE ANSWERS
Cash Management Improvement Act 1990 - Answer-Improve the transfer of federal
funds
31 CFR Part 208 Management of Federal Agency Disbursements - Answer-Requires
EFT payments
Cash Management - Answer-1) mutually beneficial relationships with banks
2) collecting and recording cash
3) generating earnings from cash
4) disbursing cash
Federal Reserve System Duties - Answer-1) conducting monetary policy
2) supervising and regulating banks
3) maintaining stability of the financial system
4) providing financial services
Warrant - Answer-Drawn on the treasury of a government
Intra-bank Transfer - Answer-A request for funds to cover a Zero Balance Account
(ZBA)
Tax Reform Act of 1986 - Answer-Arbitrage (difference between interest rate paid for
fine and the interest rate earned on the same funds)
Elements of Investing - Answer-1) Safety
2) Liquidity
3) Yield
Types of Risks - Answer-1) Credit
2) Market
3) Interest Rate
4) Currency
5) Political
Treasury Bills (T-Bills) (ST) - Answer-1) less than 1 year
2) issued at a discount
3) paid face value at maturity
4) backed by government
Certificate of Deposit (CD) (ST) - Answer-A savings certificate issued by a bank,
depositing money for a specified length of time.
, Commercial Paper (ST) - Answer-Unsecured promissory notes of $100,000 and up that
mature (come due) in 270 days or less.
Banker's Acceptance (ST) - Answer-1) Guaranteed by banks to raise money against
future production or sale of goods
2) 90 days or less
3) Sold at discount to mature at par
Repurchase Agreement (ST) - Answer-Overnight loans
Short Term Mutual Funds (ST) - Answer-1) Investment Company Act of 1940
2) pools money with other investors
Short Term Investment Funds (STIF) (ST) - Answer-1) offered by large corporations
2) maturities are laddered
Bonds (LT) - Answer-Long-term liabilities that represent money lent to the firm that must
be paid back
Debentures (debt certificate) (LT) - Answer-1) backed by credit of the issuer
2) pays higher interest rate
Zero Coupon Bonds (LT) - Answer-1) no annual interest payments
2) sold at discount
3) sensitive to interest rate risk
Separate Trading of Registered Interest and Principal Securities (STRIPS) (LT) -
Answer-Book entry system operated by the Fed permitting trading and ownership of the
principal and coupon portion of Treasury securities
Fixed Income Securities - Answer-1) Short Term
2) Long Term
3) Equity
4) Mutual Fund
5) International
6) Alternative
Index Funds (Mutual) - Answer-Attempt to match the performance of a particular index
American Depository Receipts (ADRs) (International) - Answer-Certificates representing
ownership of foreign stock held in trust.
Registered with SEC
Yankee Bonds (International) - Answer-Foreign bonds denominated in US $
Issued in US by foreign banks
