Ctp-5 Practice Test | Pdf

C Rationale: The company needs to buy euros in the future. A long forward contract locks in the exchange rate today, eliminating the risk of a stronger euro.

B Rationale: Lockbox services allow customers to send payments to a PO Box; the bank processes checks faster. Remote capture digitizes checks for quicker clearing. Domain 3: Risk Management (FX & Interest Rate) Q5. A US company will pay €1,000,000 to a German supplier in 90 days. The CFO fears the euro will strengthen against the dollar. Which hedge is most direct? A) Buy a call option on USD/EUR B) Buy a put option on EUR/USD C) Enter a long forward contract on EUR/USD D) Sell a futures contract on EUR Ctp-5 Practice Test Pdf

A firm wants to accelerate check collections from customers in rural areas. Which service is most effective? A) Controlled Disbursement B) Lockbox with remote capture C) Zero Balance Account D) Positive Pay C Rationale: The company needs to buy euros in the future

A ($2M surplus) Rationale: Net = ($10M + $15M - $18M) = $7M available. Subtract $5M reserve = $2M surplus liquidity. Remote capture digitizes checks for quicker clearing

A treasurer uses a forecast error analysis and finds a Mean Absolute Deviation (MAD) of $500,000. If the company holds a buffer of 2x MAD, what is the required safety stock of cash? A) $250,000 B) $500,000 C) $1,000,000 D) $2,000,000

C Rationale: DSO = (Accounts Receivable / Credit Sales) × 365. Lower DSO means faster collection.