UNIVERSITY EXAMINATIONS
FIN3703
Corporate Treasury Management
2025-Assignment 01-S2
,SECTION A
QUESTION 1
Treasury management is executed in any business, irrespective of its size, structure,
or industry. Which of the following activities does not fall directly under the corporate
treasury management functions in business?
a. The management of cash, liquidity, and banking relations.
b. The management of the cost of capital, capital structure and dividend pay-out.
c. The management of financial, operational, and strategic risks.
d. Management of cash forecasting, cash surpluses and cash deficits.
Circle the correct option below:
1. a and b
2. a and c
3. b and c
4. a and d
Corporate treasury management mainly deals with:
• Cash management (cash flow, surpluses, deficits, forecasting)
• Liquidity management
• Banking relations
• Short-term investments and financing
It does not directly handle:
• Cost of capital, capital structure, dividend policy → these belong to
corporate finance.
• Operational and strategic risks → these belong to risk
management/enterprise risk management, not core treasury.
, QUESTION 2
Which of the following statements below are correct about the interest rate swaps?
An interest rate swap involves counterparties who want to exchange …
a. a floating rate commitment for a fixed rate.
b. long-term debt for equity.
c. short-term debt for long-term debt.
d. fixed assets with current assets
Circle the correct option below:
1. a
2. a and c
3. a and b
4. b and d
An interest rate swap is a financial derivative where two parties exchange cash
flows based on different interest rate structures.
• Typically, one party pays a fixed rate while receiving a floating rate, and the
other does the opposite.
• It does not involve exchanging debt for equity, short-term for long-term debt,
or assets.
FOR QUESTIONS 3 TO 6, REFER TO THE FOLLOWING INFORMATION:
BestDairy Holding is a dairy-and-fruit juice blend holding company that was launched
in South Africa by Parmalat in 2005. Parmalat has four subsidiaries, one in Limpopo,
one in Gauteng, one in Kwazulu-Natal (KZN) and one in Northwest and its
headquarters are situated in Midrand where all finances are handled. The four
subsidiaries have individual bank account with different banks. Each subsidiary can
finance its deficit with an overdraft facility at a rate of 10% and invest the surplus cash,
which will earn the company 7% in interest.
The Master and subsidiaries’ bank accounts reflect the following balances:
The Limpopo subsidiary has a debit balance of R400 000.
The Gauteng subsidiary has a credit balance of -R350 000.
The KZN subsidiary has a debit balance of R200 000.
The Northwest subsidiary has a debit balance of R100 000.
FIN3703
Corporate Treasury Management
2025-Assignment 01-S2
,SECTION A
QUESTION 1
Treasury management is executed in any business, irrespective of its size, structure,
or industry. Which of the following activities does not fall directly under the corporate
treasury management functions in business?
a. The management of cash, liquidity, and banking relations.
b. The management of the cost of capital, capital structure and dividend pay-out.
c. The management of financial, operational, and strategic risks.
d. Management of cash forecasting, cash surpluses and cash deficits.
Circle the correct option below:
1. a and b
2. a and c
3. b and c
4. a and d
Corporate treasury management mainly deals with:
• Cash management (cash flow, surpluses, deficits, forecasting)
• Liquidity management
• Banking relations
• Short-term investments and financing
It does not directly handle:
• Cost of capital, capital structure, dividend policy → these belong to
corporate finance.
• Operational and strategic risks → these belong to risk
management/enterprise risk management, not core treasury.
, QUESTION 2
Which of the following statements below are correct about the interest rate swaps?
An interest rate swap involves counterparties who want to exchange …
a. a floating rate commitment for a fixed rate.
b. long-term debt for equity.
c. short-term debt for long-term debt.
d. fixed assets with current assets
Circle the correct option below:
1. a
2. a and c
3. a and b
4. b and d
An interest rate swap is a financial derivative where two parties exchange cash
flows based on different interest rate structures.
• Typically, one party pays a fixed rate while receiving a floating rate, and the
other does the opposite.
• It does not involve exchanging debt for equity, short-term for long-term debt,
or assets.
FOR QUESTIONS 3 TO 6, REFER TO THE FOLLOWING INFORMATION:
BestDairy Holding is a dairy-and-fruit juice blend holding company that was launched
in South Africa by Parmalat in 2005. Parmalat has four subsidiaries, one in Limpopo,
one in Gauteng, one in Kwazulu-Natal (KZN) and one in Northwest and its
headquarters are situated in Midrand where all finances are handled. The four
subsidiaries have individual bank account with different banks. Each subsidiary can
finance its deficit with an overdraft facility at a rate of 10% and invest the surplus cash,
which will earn the company 7% in interest.
The Master and subsidiaries’ bank accounts reflect the following balances:
The Limpopo subsidiary has a debit balance of R400 000.
The Gauteng subsidiary has a credit balance of -R350 000.
The KZN subsidiary has a debit balance of R200 000.
The Northwest subsidiary has a debit balance of R100 000.
