CPFO Treasury and Investment Management Questions
With Complete Solutions
A bond with a high yield to maturity will Correct Answers
display lower price volatility than a bond with lower yield to
maturity
A government can use... to reduce time on float collections
Correct Answers over the counter, account consolidation, and
concentration accounts
A line of credit Correct Answers is the preferred method of
short-term borrowing for governments
A money market deposit account Correct Answers is an interest
bearing account with limited redemptions and collateral is
required (i.e. must be secured)
A policy on acceptable mutual fund ratings should be
established Correct Answers
A repurchase agreement Correct Answers consists of an
inventory buying securities from a counterparty who agrees to
buy the securities back on a later date at an agreed upon price
and rate
ACH and direct deposit have reduce Correct Answers weekend
float significantly
,Active strategies include Correct Answers yield curve analysis
(reviewing rate of return based on maturity) going long vs.
going short
All cash management decisions should be made with
considerations of Correct Answers legality, safety, liquidity,
and yield
All sales of the same security after the first sale are said to
Correct Answers occur within the secondary market
An upward sloping yield curve is Correct Answers normal
Annual reports Correct Answers which are more comprehensive
should also include economic analysis while providing info
about brokers, dealers, and advisors, discussing the economy
and market, and providing a comparison to benchmark
Arbitrage Correct Answers is the simultaneous purchase and
sale of an asset in order to profit from a difference in price
Assets under management of an investment adviser Correct
Answers should be reviewed (if quickly rising it may distract
the adviser, if quickly falling you need to find out why)
At the peak of the business cycle, Correct Answers the
economy has little slack or building capacity and high
employment along with high interest rates
At the trough, Correct Answers there is much excess capacity
and weak employment levels coupled with low interest rates
, Bankers acceptances are Correct Answers moderately to highly
liquid and returns are moderate to high
Bankers acceptances are generally Correct Answers a time draft
to facilitate international trade
Bankers acceptances Correct Answers are issued by commercial
banks as an irrevocable obligation of the issuing bank and the
credit quality is determined by the bank rating
Bankruptcy risk extends for Correct Answers 90 days after
maturity and it may be asset backed
Banks charge fees for Correct Answers sweeping funds,
therefore it must be determined if the cost of sweeping funds
exceeds the cost of fees associated with FDIC assessments
Banks may lend excess reserves to Correct Answers other banks
Banks should be requested to submit their annual reports going
back how many years? Correct Answers 2 years
Banks that pass through assessment charges show may charge
Correct Answers on either the collected or ledger balance
Best practice indicates that one should obtain price quotes from
Correct Answers more than one firm to ensure a fair market
price
With Complete Solutions
A bond with a high yield to maturity will Correct Answers
display lower price volatility than a bond with lower yield to
maturity
A government can use... to reduce time on float collections
Correct Answers over the counter, account consolidation, and
concentration accounts
A line of credit Correct Answers is the preferred method of
short-term borrowing for governments
A money market deposit account Correct Answers is an interest
bearing account with limited redemptions and collateral is
required (i.e. must be secured)
A policy on acceptable mutual fund ratings should be
established Correct Answers
A repurchase agreement Correct Answers consists of an
inventory buying securities from a counterparty who agrees to
buy the securities back on a later date at an agreed upon price
and rate
ACH and direct deposit have reduce Correct Answers weekend
float significantly
,Active strategies include Correct Answers yield curve analysis
(reviewing rate of return based on maturity) going long vs.
going short
All cash management decisions should be made with
considerations of Correct Answers legality, safety, liquidity,
and yield
All sales of the same security after the first sale are said to
Correct Answers occur within the secondary market
An upward sloping yield curve is Correct Answers normal
Annual reports Correct Answers which are more comprehensive
should also include economic analysis while providing info
about brokers, dealers, and advisors, discussing the economy
and market, and providing a comparison to benchmark
Arbitrage Correct Answers is the simultaneous purchase and
sale of an asset in order to profit from a difference in price
Assets under management of an investment adviser Correct
Answers should be reviewed (if quickly rising it may distract
the adviser, if quickly falling you need to find out why)
At the peak of the business cycle, Correct Answers the
economy has little slack or building capacity and high
employment along with high interest rates
At the trough, Correct Answers there is much excess capacity
and weak employment levels coupled with low interest rates
, Bankers acceptances are Correct Answers moderately to highly
liquid and returns are moderate to high
Bankers acceptances are generally Correct Answers a time draft
to facilitate international trade
Bankers acceptances Correct Answers are issued by commercial
banks as an irrevocable obligation of the issuing bank and the
credit quality is determined by the bank rating
Bankruptcy risk extends for Correct Answers 90 days after
maturity and it may be asset backed
Banks charge fees for Correct Answers sweeping funds,
therefore it must be determined if the cost of sweeping funds
exceeds the cost of fees associated with FDIC assessments
Banks may lend excess reserves to Correct Answers other banks
Banks should be requested to submit their annual reports going
back how many years? Correct Answers 2 years
Banks that pass through assessment charges show may charge
Correct Answers on either the collected or ledger balance
Best practice indicates that one should obtain price quotes from
Correct Answers more than one firm to ensure a fair market
price
