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NEW QUESTION 155
Which of the following is true of return on investment (ROI)?
- A. It is calculated as profit per dollar of invested capital.
- B. It may cause management to accept a project with positive NPV.
- C. It includes a charge for the cost of capital in a project.
- D. It is commonly used to calculate after-tax profitability.
Answer: A
NEW QUESTION 156
An increasing number of multinational companies have adopted formal multilateral netting systems for which of the following reasons?
- A. To standardize payment routes and banking channels
- B. To facilitate management of foreign exchange exposure
- C. To eliminate duplicate payments to vendors
- D. To improve check clearing times
Answer: B
NEW QUESTION 157
Representations and warranties in a loan agreement refer to which of the following?
- A. Conditions at the time the agreement is executed
- B. Limitations that restrict the borrower's activities to protect the lender
- C. Violations of loan covenants and material adverse changes
- D. The financial condition of the borrower during the term of the loan
Answer: A
NEW QUESTION 158
An optimal concentration system minimizes all of the following EXCEPT:
- A. transfer costs.
- B. excess balances.
- C. administrative costs.
- D. disbursement float.
Answer: D
NEW QUESTION 159
XYZ Corporation is presently a short-term borrower and uses a revolving line of credit with an interest rate of 7%. The Treasurer would like to reduce interest expense and increase liquidity without renegotiating the line of credit. Which of the following projects should the Treasurer support in order to achieve this objective as quickly as possible?
- A. Purchasing is trying to extend terms from net 30 to net 60 with one of their primary vendors. The vendor will agree if XYZ concentrates purchases with them.
- B. One large store is being remodeled. When complete, it should generate sufficient additional sales within one year to cover the capital expenditure and produce a positive return on investment.
- C. Store operations believes that an increase in inventory levels will raise sales as the corporation eventually becomes known for its wide selection.
- D. Accounts receivable is spending capital to improve its collection system. With the faster collections that will result, it anticipates recovering the outflows over a two-year period.
Answer: A
NEW QUESTION 160
A company converts the expense processing for its sales team from reimbursement by check to providing the team with travel and entertainment cards. Immediately, the company's expenses for the sales force increase by 10%, with no concurrent increase in sales volumes. What aspect should the company have covered in their policies for card use to prevent the increased expenses?
- A. Approved uses
- B. Vulnerability management
- C. Access control
- D. Definition of responsibilities
Answer: A
NEW QUESTION 161
A manufacturing company selling engines and other mechanical equipment, with invoices averaging $15,000, would use which of the following systems?
- A. A wholesale lockbox with multiple deposit points
- B. Over-the-counter collections in numerous locations; deposits to field banks
- C. A company processing center; deposits to nearby bank(s)
- D. A retail lockbox with multiple deposit points
Answer: A
NEW QUESTION 162
A multinational company that uses "notional pooling" for its euro zone subsidiaries will realize which of the following advantages?
- A. Enhanced accounting for transactions since funds are transferred into one account
- B. Subsidiary cash balances are netted each day to calculate interest, but funds are not transferred
- C. Mobilization of cash resources and thus economies of scale in making transfers
- D. An expanded number of euro zone banks in order to facilitate better service to transfer funds
Answer: B
NEW QUESTION 163
A U.S.-based electronics company that buys components from one of its foreign subsidiaries at a price above market is likely to:
- A. be paid large dividends by the subsidiary.
- B. be sheltering profits in a low-tax country.
- C. need tax consultants to act as intermediaries.
- D. make payment with an intracompany loan.
Answer: B
NEW QUESTION 164
A company transmits a payment file of ACH and Fedwire vendor payments to its financial institution to execute. Which article of the Uniform Commercial Code governs these payments?
- A. Article 4
- B. Article 4A
- C. Article 3
- D. Article 5
Answer: B
NEW QUESTION 165
The Treasury Manager of a chain of department stores wants to develop a medium-term forecast.
Management plans to open two new stores, and anticipates same-store sales to increase by 15%.
Which of the following items can be predicted with the highest degree of certainty?
- A. New product sales
- B. Taxes on stock options
- C. Refranchising proceeds
- D. Fixed bond interest payment
Answer: D
NEW QUESTION 166
All of the following staff would be involved in the evaluation of an outsourced accounts payable solution EXCEPT:
- A. a controller.
- B. a credit manager.
- C. a treasurer.
- D. an internal auditor.
Answer: B
NEW QUESTION 167
Which of the following is an example of a company's internal data used for cash management?
- A. Returned deposited items
- B. Investment schedules
- C. Incoming wire transfers
- D. Money market rates
Answer: B
NEW QUESTION 168
When a paper check is converted to an electronic form:
- A. the payment becomes irrevocable and unconditional.
- B. it falls under the rules of Regulation E.
- C. it retains its status as a check.
- D. the source document is always returned to the originator.
Answer: B
NEW QUESTION 169
To monitor financial institution service quality, a company would use all of the following measures EXCEPT:
- A. informal reviews on day-to-day relationship management.
- B. annual senior management reviews.
- C. an earnings allowance rate.
- D. report cards.
Answer: C
NEW QUESTION 170
ABC Corporation receives images of paid check exception items from its bank and reviews them daily. What action should be taken on an item where the payee on the image does NOT match the data from ABC Corporation's accounts payable?
- A. Image remains stored on ABC Corporation's network for future customer inquiries.
- B. Bank alerts payee that check is unmatched.
- C. No-pay decision is communicated to the bank.
- D. ABC Company utilizes the holder in due course defense.
Answer: C
NEW QUESTION 171
A company hires an investment firm to fully underwrite a new stock issuance. Which of the parties carries the MOST risk?
- A. The company
- B. The company's bond holders
- C. The public
- D. The investment firm
Answer: D
NEW QUESTION 172
Which of the following are examples of covenants in loan agreements?
I.Financial ratios II.Corporate resolutions III.Borrower limitations IV.Borrower obligations
- A. I, III, and IV
- B. I and III
- C. II and III
- D. I, II, and IV
Answer: A
NEW QUESTION 173
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