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NEW QUESTION 516
The analysis of a company launching an initial public offering includes disclosure of information that may interest investors. It also includes confirmation that financial statements reflect true value under GAAP and other pertinent areas of a company's operations. What is this analysis known as?
- A. SEC Form 10-K
- B. Due diligence
- C. SOX 302 subcertification
- D. FASB FAS 115
Answer: B
NEW QUESTION 517
An increasing number of multinational companies have adopted formal multilateral netting systems for which of the following reasons?
- A. To eliminate duplicate payments to vendors
- B. To improve check clearing times
- C. To standardize payment routes and banking channels
- D. To facilitate management of foreign exchange exposure
Answer: D
NEW QUESTION 518
All of the following are reasons to use a confirmed irrevocable letter of credit EXCEPT concern about:
- A. the stability of the buyer's bank.
- B. foreign currency exposure.
- C. the buyer's ability to pay.
- D. the ability to receive cross-border payments.
Answer: B
NEW QUESTION 519
Which of the following is a KEY objective when instituting a collection and concentration policy?
- A. Regulatory and legal considerations
- B. Establishing approved collection practices
- C. Cost efficiency
- D. Performance measurement
Answer: C
NEW QUESTION 520
Measurement of a company's liquidity includes the calculation of all of the following EXCEPT:
- A. current ratio.
- B. return on equity.
- C. cash turnover.
- D. quick ratio.
Answer: B
NEW QUESTION 521
The goal of investor relations is to:
- A. maintain the company's stock listing on the NYSE.
- B. make sure all shareholders cast a vote at the annual meeting.
- C. ensure that a company's securities achieve a fair valuation in the marketplace.
- D. ensure equity analysts have all available company information at any point in time.
Answer: C
NEW QUESTION 522
Which of the following is true when a company purchases goods using trade credit from suppliers?
- A. The supplier will charge interest to the buyer.
- B. The supplier places a lien on the goods sold until payment.
- C. The buyer incurs no added cost if it pays on time.
- D. The buyer should record this as a long-term liability.
Answer: C
NEW QUESTION 523
A portfolio manager wishes to make a short-term investment. His investment policy requires that short-term investments be low risk and secured, have a fixed interest rate and be highly liquid/redeemable prior to maturity. Which of the following should the manager choose?
- A. Asset-backed commercial paper
- B. Commercial paper
- C. Government treasury bills
- D. Bank obligations
Answer: A
NEW QUESTION 524
If a corporation pays 70% of its current earnings to its stockholders in the form of cash dividends, the remaining 30% kept by the company will cause a(n):
- A. decrease in stockholders' equity.
- B. decrease in earned surplus.
- C. increase in capital surplus.
- D. increase in retained earnings.
Answer: D
NEW QUESTION 525
A company has grown quickly in the euro zone market. It wants to maximize its excess cash. Which would be the BEST method of concentrating funds?
- A. Notional Pooling
- B. Bank Overlay
- C. Scheduled Transfer
- D. Physical Pooling
Answer: D
NEW QUESTION 526
Which of the following statements is true about threshold concentration?
- A. Balances are set and funds above that level are transferred to the concentration bank.
- B. Wire transfers are initiated on the basis of deposit information.
- C. Daily transfers are often needed to maintain balances at the desired level.
- D. Balances are transferred to the concentration bank after reaching a predetermined level.
Answer: D
NEW QUESTION 527
XYZ Company is interested in issuing a bond to finance a new venture opportunity. The new venture is not expected to generate any cash flow for several years. Because of this, XYZ Company would prefer to issue a bond that does not require interest payments. What type of bond should XYZ Company issue?
- A. Municipal bond
- B. High-yield bond
- C. Tender option bond
- D. Zero-coupon bond
Answer: D
NEW QUESTION 528
For days' sales outstanding to be a meaningful method for evaluating the effectiveness of a company's receivable collections, it is usually compared to the:
- A. accounts receivable turnover ratio.
- B. overall level of past due receivables.
- C. stated credit terms.
- D. bad debt reserve.
Answer: C
NEW QUESTION 529
The first step in the financial institution and financial services provider (FSP) selection process should be:
- A. identifying the critical product or service specifications.
- B. establishing a grading mechanism.
- C. evaluating the cost of switching providers.
- D. selecting a pool of available candidates.
Answer: A
NEW QUESTION 530
An analyst at XYZ Company was assigned with determining if the company should start to use a lockbox provider for its retail payments. The analyst determined that the company's annual sales of $324,000,000 were recorded evenly throughout the year. The Company receives 30,000 checks annually. Total dollar-days float without the lockbox is $76,500,000 and the annual opportunity cost is 5.5%; assume 30-day month. The industry's average
opportunity cost is 6.0%. Using the information in the table,what would be the net effect of
using the lockbox?
- A. Net savings of $63,000
- B. Net savings of $57,750
- C. Net savings of $1,890,000
- D. Net savings of $1,732,500
Answer: B
NEW QUESTION 531
A netting system can be used for all of the following EXCEPT:
- A. intracompany transactions.
- B. giro payments.
- C. third-party payments or receipts.
- D. foreign exchange transactions.
Answer: B
NEW QUESTION 532
Which of the following can be considered key responsibilities of daily cash management?
I) Overseeing compensation for bank services
II) Management of short-term borrowing and investing
III) Projecting future cash shortages and surpluses
- A. I and II only
- B. I, II, and III
- C. I only
- D. II and III only
Answer: B
NEW QUESTION 533
A banker's acceptance can be described as all of the following EXCEPT:
- A. a liability of the accepting bank.
- B. a discount instrument.
- C. a sight draft.
- D. an easily marketable instrument.
Answer: C
NEW QUESTION 534
Which of the following credit terms would be MOST appropriate for a seasonal product that a manufacturer wants to sell to a retailer during the product's off-season?
- A. 2/10, net 120
- B. 2/10, net 30
- C. 3/15, 2/30, net 45
- D. 2/10, prox 30
Answer: A
NEW QUESTION 535
Which report is MOST LIKELY to be a current-day information report?
- A. Multibank balance report
- B. Controlled disbursement totals
- C. Loan transaction detail
- D. Debit/credit transaction listing
Answer: B
NEW QUESTION 536
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