CTP PRACTICE EXAM REVIEW;
QUESTIONS WITH DETAILED VERIFIED
ANSWERS; ALREADY GRADED A; 2026
A $50 par value preferred stock pays a 7.50% annual
dividend and the market currently requires a 9.00%
percent return on the stock. What is the market price of
the preferred stock? (Rounded to the nearest cent) -
correct answer- $41.67
A $100,000 Treasury bill that matures in 182 days is
currently selling at 9%. What is the bond equivalent yield
on this security? (Rounded to the nearest hundredth of a
percent) - correct answer- 9.57%
A bank hold harmless agreement against consequential
damages from a misdirected wire transfer is an example
of which of the following risk management techniques? -
correct answer- Contractual transfer
A best practice for internal controls is to include which of
the following in an organization's investment policy? -
,correct answer- Monthly reconciliation of
investment statements and records to the general ledger
A biotech firm expects to use $600,000 of short-term
borrowings, but it wants to establish a $1,000,000 credit
line to ensure adequate reserve borrowing capacity. A
lender offers the firm LIBOR plus a risk premium of 1.25%.
The lender requires a commitment fee of 0.30% (30 basis
points) on the unused portion of the line. LIBOR at the
time of the loan is 2.25%. What is the annualized cost of
the line? (rounded to the nearest tenth of a percent) -
correct answer- 3.7%
A broker/dealer organization has a highly decentralized
structure and clear policies and procedures for handling
its customers' investments. When it comes to the
organization's own investments it should have
_____________. - correct answer- A clearly
defined and documented investment policy that
emphasizes daily liquidity
A business wants to make Automated Clearing House
(ACH) payments to a vendor, but the vendor refuses to
,use ACH unless the business submits each of the multiple
invoices with the overall payment. This additional
remittance information totals several records of up to 80
characters each. What sort of ACH payment format must
the business use? - correct answer- Corporate
trade exchange (CTX)
A cash manager can use short-term forecasting to
perform all of the following functions EXCEPT
___________. - correct answer- Determining a
company's collection history
A commodity buyer purchases a forward contract on
coffee at $20 per bag, deliverable in 90 days. At the end of
the 90 days, the open market price for coffee is $18 per
bag. Which of the following actions should the buyer
take? - correct answer- Fulfill the contract, even
though the buyer's long position lost value
A company can use which of the following to reduce
financial exposures?
I. Options
, II. Swaps
III. Futures
IV. Forwards - correct answer- I, II, III and IV
A company decides to enter into a currency swap with a
foreign company. The biggest risk in using such a swap is
_____________. - correct answer-
Counterparty risk
A company discovers that there is a substantial risk that
inbound payments could be posted to the wrong account.
This is an example of what type of risk? - correct
answer- Process risk
A company has entered into a 5 year revolving credit
agreement with a size of $2,000,000. The lender requires
a commitment fee of 0.15% (15 basis points) on the
unused portion of the line. LIBOR at the time of the loan is
0.50%. The rate on the used portion of the line is LIBOR
plus 2.50%, or 3.00% (the all-in rate). Assuming that the
firm uses $1,200,000 of short-term borrowings and LIBOR
stays constant, what is the annual cost of maintaining the
QUESTIONS WITH DETAILED VERIFIED
ANSWERS; ALREADY GRADED A; 2026
A $50 par value preferred stock pays a 7.50% annual
dividend and the market currently requires a 9.00%
percent return on the stock. What is the market price of
the preferred stock? (Rounded to the nearest cent) -
correct answer- $41.67
A $100,000 Treasury bill that matures in 182 days is
currently selling at 9%. What is the bond equivalent yield
on this security? (Rounded to the nearest hundredth of a
percent) - correct answer- 9.57%
A bank hold harmless agreement against consequential
damages from a misdirected wire transfer is an example
of which of the following risk management techniques? -
correct answer- Contractual transfer
A best practice for internal controls is to include which of
the following in an organization's investment policy? -
,correct answer- Monthly reconciliation of
investment statements and records to the general ledger
A biotech firm expects to use $600,000 of short-term
borrowings, but it wants to establish a $1,000,000 credit
line to ensure adequate reserve borrowing capacity. A
lender offers the firm LIBOR plus a risk premium of 1.25%.
The lender requires a commitment fee of 0.30% (30 basis
points) on the unused portion of the line. LIBOR at the
time of the loan is 2.25%. What is the annualized cost of
the line? (rounded to the nearest tenth of a percent) -
correct answer- 3.7%
A broker/dealer organization has a highly decentralized
structure and clear policies and procedures for handling
its customers' investments. When it comes to the
organization's own investments it should have
_____________. - correct answer- A clearly
defined and documented investment policy that
emphasizes daily liquidity
A business wants to make Automated Clearing House
(ACH) payments to a vendor, but the vendor refuses to
,use ACH unless the business submits each of the multiple
invoices with the overall payment. This additional
remittance information totals several records of up to 80
characters each. What sort of ACH payment format must
the business use? - correct answer- Corporate
trade exchange (CTX)
A cash manager can use short-term forecasting to
perform all of the following functions EXCEPT
___________. - correct answer- Determining a
company's collection history
A commodity buyer purchases a forward contract on
coffee at $20 per bag, deliverable in 90 days. At the end of
the 90 days, the open market price for coffee is $18 per
bag. Which of the following actions should the buyer
take? - correct answer- Fulfill the contract, even
though the buyer's long position lost value
A company can use which of the following to reduce
financial exposures?
I. Options
, II. Swaps
III. Futures
IV. Forwards - correct answer- I, II, III and IV
A company decides to enter into a currency swap with a
foreign company. The biggest risk in using such a swap is
_____________. - correct answer-
Counterparty risk
A company discovers that there is a substantial risk that
inbound payments could be posted to the wrong account.
This is an example of what type of risk? - correct
answer- Process risk
A company has entered into a 5 year revolving credit
agreement with a size of $2,000,000. The lender requires
a commitment fee of 0.15% (15 basis points) on the
unused portion of the line. LIBOR at the time of the loan is
0.50%. The rate on the used portion of the line is LIBOR
plus 2.50%, or 3.00% (the all-in rate). Assuming that the
firm uses $1,200,000 of short-term borrowings and LIBOR
stays constant, what is the annual cost of maintaining the
