CTP Exam Practice Questions with Correct Answers

CTP Exam Practice Questions with Correct Answers. A bank is evaluating the credit risk for a company seeking to optimize costs and originate a high volume of outgoing ACH payments. What is the BEST provision the bank should establish to control its credit exposure? A. An intraday credit limit for the company B. A limit on the number of items processed per day C. An overdraft facility for the company D. A standby letter of credit for the company - Answer-A .A bank issues a letter of credit (L/C) and receives a request for payment under the L/C. The buyer notifies the issuing bank not to make payment because there is a dispute over the quality of the merchandise. However, the documents received fully comply with the terms of the L/C. Which of the following statements is true? A. The buyer may immediately return the merchandise and cancel the L/C. B. The bank may delay payment until reimbursed by the buyer. C. The bank may delay payment, provided the seller is notified of the dispute within three business days. D. The bank must make payment and is entitled to immediate reimbursement from the buyer. - Answer- .A buyer receives an invoice from a supplier that offers discount terms of 3/10, net 60. What is the effective cost of discount? A. 15.64% B. 16.13% C. 21.90% D. 22.58% - Answer-D .A cash manager has determined that the break-even amount for justifying a wire transfer over an ACH for concentration of funds is $145,000. Using a wire instead of an ACH givesthe company use of the funds two days earlier to make overnight investments. Based on a wire transfer cost of $10.00 and an ACH transaction cost of $0.70, what is the company's overnight investment interest rate on a 365-day year basis? A. 0.95% B. 1.17% C. 2.34% D. 2.57% - 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