Treasury & Corporate Finance Mastery | 60
Verified Questions with Correct Answers |
Updated 2025
A cash manager at a retailer forecasts a positive collected cash position for the end of the current day.
The company has an overdraft facility at 10%, a separate investment account earning 8% before taxes,
an earnings credit rate of 8% and an outstanding single payment note at 9.5% maturing in 1 week. This
month's bank service fees are expected to exceed the earnings credit. Which of the following intra-day
options would be the MOST economically positive for the company?
A. Leave the funds in the account
B. Redeem the single payment note
C. Prepay administrative expenses D. Transfer funds to the investment account - ✔✔A
A company can pay their supplier by check or by electronic transfer. If the difference between the value
date of the payment methods is 4 days from the company's perspective, what discount should the
supplier offer them to get the company to pay on the same day as they did when they paid by check
(rounded to the nearest 100th percent)? Assume no difference in the cost of the payment method, an
opportunity cost of 8%, and float neutrality.
A. 2.00% B. 0.09% C. 0.87% D. 0.02% - ✔✔B
ABC Company, a leading provider of office supplies, has successfully implemented EDI based on a
request from one of its customers. ABC will not only benefit from the strategic alliance that will result,
but as more of ABC's customers adopt the program, ABC will also experience a positive impact on its: A.
EFT costs
B. C2C levels
C. Value added networks
D. Inventory levels - ✔✔D
A portfolio manager purchases a floating rate mortgage backed security that would currently provide a
4% yield to the company. Since mortgage rates have been fluctuating significantly over the past month,
the manager is thinking about entering into an interest rate swap to hedge against the rate movements.
Although the manager would remove most of the price sensitivity of the asset by executing the swap, it
would also lower the total yield on the investment due to swap costs. What objective in the company
, investment policy is guiding the portfolio manager's decision?
Verified Questions with Correct Answers |
Updated 2025
A cash manager at a retailer forecasts a positive collected cash position for the end of the current day.
The company has an overdraft facility at 10%, a separate investment account earning 8% before taxes,
an earnings credit rate of 8% and an outstanding single payment note at 9.5% maturing in 1 week. This
month's bank service fees are expected to exceed the earnings credit. Which of the following intra-day
options would be the MOST economically positive for the company?
A. Leave the funds in the account
B. Redeem the single payment note
C. Prepay administrative expenses D. Transfer funds to the investment account - ✔✔A
A company can pay their supplier by check or by electronic transfer. If the difference between the value
date of the payment methods is 4 days from the company's perspective, what discount should the
supplier offer them to get the company to pay on the same day as they did when they paid by check
(rounded to the nearest 100th percent)? Assume no difference in the cost of the payment method, an
opportunity cost of 8%, and float neutrality.
A. 2.00% B. 0.09% C. 0.87% D. 0.02% - ✔✔B
ABC Company, a leading provider of office supplies, has successfully implemented EDI based on a
request from one of its customers. ABC will not only benefit from the strategic alliance that will result,
but as more of ABC's customers adopt the program, ABC will also experience a positive impact on its: A.
EFT costs
B. C2C levels
C. Value added networks
D. Inventory levels - ✔✔D
A portfolio manager purchases a floating rate mortgage backed security that would currently provide a
4% yield to the company. Since mortgage rates have been fluctuating significantly over the past month,
the manager is thinking about entering into an interest rate swap to hedge against the rate movements.
Although the manager would remove most of the price sensitivity of the asset by executing the swap, it
would also lower the total yield on the investment due to swap costs. What objective in the company
, investment policy is guiding the portfolio manager's decision?
