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NO.1 Company RST is a seasonal retailer who has just completed its holiday season and is
temporarily flush with cash. The treasurer has identified approximately $15 million of excess balances
and is trying to determine what to do with the surplus cash. Cash forecasts show that the funds will
be needed in approximately 30 days to replenish inventory. Which of the following plans should the
treasurer implement immediately?
A. Purchase low-risk, short-term investments yielding 2%.
B. Buy a long-term, highly rated investment paying 2.10%.
C. Prepay a $15 million, 5% loan maturing in 1 year.
D. Leave the funds in RST's bank account earning an ECR of 1%.
Answer: A

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NO.2 A cash manager is determining the threshold over which cash concentrations will be done by
wire. An ACH transaction costs $0.50. A wire costs $12.00. Funds are available 2 days quicker by wire
and the opportunity cost of funds is 5%. What threshold should the cash
manager use?
A. $43,800
B. $87,600
C. $41,975
D. $83,942
Answer: C

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Posted 2017/2/27 9:33:21  |  Category: AFP  |  Tag: CTP Reliable Free Study QuestionsCTP Books PDFAFP
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