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CTP Exam Dumps - Certified Treasury Professional

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Question # 129

Which of the following is NOT a drawback to using ROI as a performance measure?

A.

It may be misleading when cash flows are not evenly distributed over time.

B.

It does not consider the profit generated by a project.

C.

It does not include a charge for cost of capital.

D.

It may lead to rejection of a positive NPV project.

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Question # 130

An optimal concentration system minimizes all of the following EXCEPT:

A.

administrative costs.

B.

disbursement float.

C.

excess balances.

D.

transfer costs.

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Question # 131

Which of the following trade payment methods virtually eliminates the seller's credit risk?

A.

Bankers’ acceptance

B.

Cash before delivery

C.

Countertrade

D.

Consignment

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Question # 132

One of the advantages of raising capital through public offerings is that:

A.

it reduces fluctuations in the price of capital.

B.

it reduces the costs of managing reporting and disclosure.

C.

large amounts of debt and equity can be raised at the risk-free rate.

D.

large amounts of debt and equity can be raised at prevailing rates.

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Question # 133

A telecommunications company receives a profit of $587,542 from its cellular phone production unit in the year after investing $962,870 in a new product line. What is the first year return on its original investment?

A.

56%

B.

58%

C.

61%

D.

64%

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Question # 134

The Federal Reserve can increase the money supply by:

A.

increasing the reserve requirement.

B.

increasing the discount rate.

C.

selling government securities.

D.

purchasing government securities.

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Question # 135

An instrument that gives the right to buy a stated number of shares of common stock at a specified price is known as:

A.

an equity warrant

B.

a put option

C.

a zero coupon bond

D.

a subordinated debenture

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Question # 136

XYZ Company is considering selling treasury stock but is concerned about the amount of capital it will raise given the current high volatility of the stock market. What is the BEST strategy a firm can employ to reduce its uncertainty?

A.

Hire an investment banker to underwrite the stock on a full underwriting basis.

B.

Hire an investment banker to issue the stock using a master registration statement.

C.

Hire an investment banker to underwrite the stock with no flotation costs.

D.

Hire an investment banker to underwrite the stock on a best efforts basis.

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