Question 1

What should a company’s senior management consider in their payment policies to eliminate the co-mingling of funds for payables, receivables and foreign exchange transactions?

Options :

A : Required control points

B : Bank account structuring

C : Payment laws and regulations

D : Participants in the payment process

Answer: B

Question 2

A U.S. company has a secured committed line of credit of $5 million. The company successfully transmitted a $5.5 million wire transfer instruction out to the bank. The bank contacted the company and informed it that the wire transfer would not be processed. What is the MOST LIKELY reason the bank gave the company?

Options :

A : The company overdraft facility was sufficient.

B : The bank imposed a guidance line of credit on the account.

C : The company reached its maximum limit on the committed line.

D : The bank refused funding on the company’s discretionary line of credit.

Answer: B

Question 3

An inverted yield curve occurs when which of the following is true?

Options :

A : As rates on current issues rise, the price of existing issues falls

B : In anticipation of lower long-term rates, investors push short-term rates down.

C : The longer the maturity of the investment, the greater the risk of a price decline.

D : The longer the maturity of the investment, the lower the rate of return.

Answer: D

Question 4

Which of the following would MOST LIKELY cause a decrease in a company's deposited checks availability?

Options :

A : The depository bank institutes an earlier deposit deadline.

B : The Federal Reserve implements same-day presentment

C : The company-s lockbox bank implements weekend processing.

D : The company encodes its own checks prior to deposit.

Answer: A

Question 5

A bank issues a letter of credit (L/C) and receives a request for payment under the L/C. The buyer notifies the issuing bank not to make payment because there is a dispute over the quality of the merchandise. However, the documents received fully comply with the terms of the L/C. Which of the following statements is true?

Options :

A : The buyer may immediately return the merchandise and cancel the L/C.

B : The bank may delay payment until reimbursed by the buyer.

C : The bank may delay payment, provided the seller is notified of the dispute within three business days.

D : The bank must make payment and is entitled to immediate reimbursement from the buyer.

Answer: D

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