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Selected CTP AFP Certification Questions Answers

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Question 84

A company has negotiated a credit facility with the following terms:

  • $5,000,000 line of credit
  • $3,000,000 average borrowing
  • 30 basis point commitment fee on the unused portion of the line
  • Interest rate on advances is 1-month LIBOR plus 4%
  • 1-month LIBOR is currently 2%

What is the annual interest rate on the line of credit?

Options:

A.

6.0%

B.

6.2%

C.

9.0%

D.

9.3%

Question 85

The combination of difference in condition (DIC) insurance and umbrella insurance:

Options:

A.

transfers risk to a company’s captive insurance subsidiary.

B.

replaces the coverage provided by basic property and liability insurance.

C.

supplements the coverage provided by basic property and liability insurance.

D.

provides payments to a company in the event it is unable to pursue a line of business due to an unforeseen event.

Question 86

The “agency problem” refers to:

Options:

A.

management’s use of a fiduciary agent for stockholders.

B.

a large and active institutional investor base acting on behalf of individual investors.

C.

stockholders who allow management to take actions that will benefit management.

D.

the internal audit function reporting to the audit committee of the board instead of to management.

Question 87

A put option gives the holder the right to:

Options:

A.

buy the underlying stock at the strike price.

B.

sell the underlying stock at the strike price.

C.

sell short shares of the underlying stock at the strike price.

D.

buy long shares of the underlying stock at the strike price.

Page: 21 / 34
Exam Code: CTP
Exam Name: Certified Treasury Professional
Last Update: Dec 22, 2024
Questions: 932
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