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NEW QUESTION 184
XYZ Company is a fairly new and high growth company funded by venture capital. Which of the following performance measures is it MOST LIKELY to use?
- A. Economic value added
- B. Free cash flow
- C. Net present value
- D. Residual income
Answer: B
NEW QUESTION 185
Which one of the following is true of capital repatriation for multinational companies?
- A. Intracompany loans which are paid back promptly may be considered dividends.
- B. Transfer pricing can be used to locate profits in subsidiaries in high tax jurisdictions.
- C. Management fees paid by the subsidiary may require negotiation with the host government.
- D. Payment of dividends may not be taxed by host governments.
Answer: C
NEW QUESTION 186
XYZ Company is considering the purchase of a security that generates a tax equivalent yield of 10% and a tax exempt yield of 7.1%. What is XYZ's marginal investment tax rate?
- A. 40.8%
- B. 36.1%
- C. 29.0%
- D. 61.0%
Answer: C
NEW QUESTION 187
In terms of capital structure, lease financing normally has the same effect as:
- A. lending.
- B. investing.
- C. capitalizing.
- D. borrowing.
Answer: D
NEW QUESTION 188
Fluctuations in interest rates and the availability of funds are more significant risks for companies that rely on:
- A. long-term borrowing for long-term uses.
- B. short-term borrowing for short-term uses.
- C. short-term borrowing for long-term uses.
- D. long-term borrowing for short-term uses.
Answer: C
NEW QUESTION 189
When a subsidiary borrows money, the parent, sister subsidiary, or other entity is often used in order to:
- A. prevent a covenant violation.
- B. guarantee the obligations of the borrower.
- C. diversify the risk of the investment.
- D. increase the return of a security.
Answer: B
NEW QUESTION 190
A multinational company may use which of the following to locate profits in subsidiaries in low-tax countries?
- A. Intracompany loans
- B. Management fees
- C. Transfer pricing
- D. Dividends
Answer: C
NEW QUESTION 191
ABC Company offers trade terms of 2/10 NET 30. For several reasons, ABC has decided to eliminate the requirement for a letter of credit from one of its customers. If ABC puts the
customer on open book credit, what is the MOST LIKELY outcome?
- A. ABC's credit rating will suffer.
- B. The customer's working capital has deteriorated.
- C. ABC's working capital is unchanged.
- D. The customer's cost of borrowing will increase.
Answer: C
NEW QUESTION 192
Which of the following activities creates administrative costs associated with a concentration system?
- A. Reviewing positive pay exception reports
- B. Centralizing the check issuance process
- C. Monitoring short-term investments
- D. Scheduling cash transfers
Answer: D
NEW QUESTION 193
An accountant is fired after reporting to the SEC that she witnessed the CFO inappropriately reduce expenses ahead of the quarterly earnings announcement. Which of the following would apply?
- A. The CFO is protected by the code of ethics.
- B. The CFO is liable for Bank Secrecy Act reporting.
- C. The accountant is protected by 'whistle-blower' laws.
- D. The accountant is in violation of Section 404 of the Sarbanes-Oxley Act.
Answer: C
NEW QUESTION 194
The accounting requirement that a product's selling costs be recorded in the same period as the product's revenue is recorded, regardless of when the cash is paid, is an example of the:
- A. historical cost principle.
- B. full disclosure principle.
- C. matching principle.
- D. revenue recognition principle.
Answer: C
NEW QUESTION 195
The Treasurer at ABC Company currently uses an in-house company-processing lockbox center. The Treasurer has asked for an analysis to determine the major advantage of using a traditional check/mail-based lockbox system. ABC receives 287,000 payments per month and hired seven additional staff members to process the payments in-house. Additionally, $389,000 was invested in the equipment used to process the payments and NSF checks have decreased 7% since using the in-house center. The equipment's current market value is equal to its book value. What major advantage should the analysis indicate?
- A. Net income will improve.
- B. NSF checks will continue to decrease.
- C. Availability float will be reduced.
- D. The equipment can be sold at no loss.
Answer: C
NEW QUESTION 196
Which scenario provides the BEST example of an agency problem?
- A. An account manager approves a risky loan in order to meet a salary incentive.
- B. A CFO hires an independent auditor to review the company's balance sheet.
- C. A Treasurer accepts a free round of golf from a banker.
- D. A CEO is close friends with a competitor's CEO.
Answer: A
NEW QUESTION 197
A company's accounts receivable balance pattern is shown in the first table. Credit sales are shown in the second table.
What is the cash inflow for the month of August?
- A. $300
- B. $213
- C. $238
- D. $633
Answer: C
NEW QUESTION 198
Treasury policies and procedures should include responsibilities for:
- A. approving department salary increases.
- B. determining when dividends should be paid.
- C. key personnel in the treasury organization.
- D. evaluating alternative capital projects.
Answer: C
NEW QUESTION 199
Treasury policies and procedures should outline roles and responsibilities for which of the following activities?
- A. Establishing and communicating a company's credit policies
- B. Monitoring compliance with trade payment terms
- C. Initiating and approving internal and external transfers
- D. Determining how much earnings are to be paid out in dividends
Answer: C
NEW QUESTION 200
A put option is out of the money when the asset price:
- A. exceeds the strike price.
- B. is equal to the strike price.
- C. is less than the strike price.
- D. is unchanged relative to the purchase price.
Answer: A
NEW QUESTION 201
Which of the following would be considered insurance risk management services?
- A. External auditors who are hired to review financial statements
- B. Information-system consultants who upgrade loss controls
- C. IT professionals who ensure the treasury workstation properly converts FX
- D. Risk group that recommends the CFO approve SOX 404 compliance
Answer: B
NEW QUESTION 202
Which of the following is the appropriate strategy to use for an active portfolio manager who is faced with an upward sloping yield curve?
- A. Purchase a security maturing when the funds are needed
- B. Purchase a security and hold to maturity
- C. Purchase a security and sell before maturity
- D. Purchase a security maturing before the funds are needed
Answer: C
NEW QUESTION 203
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