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Certified Treasury Professional

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Question # 31

During the 1970s, many companies instituted dividend reinvestment plans (DRIPS). There are many benefits of this plan. What is the one negative aspect?

Options:

A.  

Reduces the expense of shareholder relations

B.  

Leads to an increase in the number of small shareholders

C.  

Does not allow automatic reinvestment of dividends

D.  

Leads to a reduction in the number of small shareholders

Discussion 0
Question # 32

Company XYZ has determined that its weighted average cost of capital is 12.5%. The capital structure of the company is made up of 75% equity and 25% debt. The before-tax cost of debt is 10%. Given a tax rate of 34%, what is XYZ's cost of common stock?

Options:

A.  

13.25%

B.  

14.47%

C.  

15.25%

D.  

16.53%

Discussion 0
Question # 33

Which of the following is subject to translation exposure?

Options:

A.  

A German company with a subsidiary in Spain

B.  

A Spanish company with revenues in euros

C.  

A Japanese subsidiary in the United States with U.S. dollar liabilities

D.  

A U.K. company that exports goods to the United States

Discussion 0
Question # 34

What must be measured and monitored to ensure that a company has adequate liquidity?

Options:

A.  

Net receivables

B.  

Stock price

C.  

Short-term borrowing obligations

D.  

Net working capital

Discussion 0
Question # 35

In which of the following international cash management methods is title for goods transferred for intercompany sales?

Options:

A.  

Pooling

B.  

Internal factoring

C.  

Multilateral netting

D.  

Re-invoicing

Discussion 0
Question # 36

What is the MOST appropriate rate used as the discount rate in calculating NPV?

Options:

A.  

Marginal cost of capital

B.  

IRR

C.  

Cost of debt

D.  

Internal transfer rate

Discussion 0
Question # 37

Which of the following is a characteristic of giro systems used in countries in Europe?

Options:

A.  

They operate through their postal systems.

B.  

They are primarily used for company-to-company payments.

C.  

They do not replace checks for the payment of bills.

D.  

They do not allow the use of direct debits and credits.

Discussion 0
Question # 38

ABC Company is a national retail company and uses XYZ Bank for its collections and payroll services. XYZ has recently experienced financial problems; what is the greatest risk to ABC Company?

Options:

A.  

Damage to their working relationship

B.  

Deterioration of service quality

C.  

Increase in service fees

D.  

Loss of assets

Discussion 0
Question # 39

A large multinational company with multiple autonomous operational entities is MOST LIKELY to operate.

Options:

A.  

a decentralized treasury structure.

B.  

a shared service center.

C.  

a centralized treasury structure.

D.  

an in-house bank.

Discussion 0
Question # 40

Company ABC has recently started to experience a significant reduction in funds availability. Which of the following is MOST LIKELY to reduce funds availability?

Options:

A.  

Ledger balances have increased.

B.  

Company negotiated a later availability schedule.

C.  

Company no longer pre-encodes its checks for deposit.

D.  

Deposits are arriving at bank later, but prior to cutoff time.

Discussion 0
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