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 PRACTICE BOOK» NOT FOR SALE
Contents

1 TREASURY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 TREASURY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
 1. TREASURY MANAGEMENT
1.1 TREASURY MANAGEMENT
1. The treasury staff uses the information
it obtained from its cash forecasting and
working capital management activities to
ensure that sufficient cash is available for
operational needs.
A. Working capital management
B. Cash management
C. Investment management
D. Treasury risk management
2. What are the responsibilities of a financial
controller for managing liquidity?
A. Analyzing accounting records for finan-
cial reporting purposes.
B. Developing appropriate policies to
manage liquidity.
C. Producing financial plans, forecasts
and reports.
D. All of the above.
3. The limit fixed by the Bank to its dealer to
restrict loss due to adverse movement in
the exchange rate is known as limit
A. Loss avoidance
B. loss prevention
1. B 2. D 3. C
NARAYAN CHANGDER
C. cut loss (stop loss)
D. none of above
4. Acronym NOOPL stands for
A. Net operable Open permitted limit
B. Net Overnight Open Position Limit
C. Net Open operative position limit
D. none of above
5. Restricted cash can be either trapped cash
(cash trapped in regulated jurisdictions or
countries where attempts to repatriate
cash face tax-unfriendly situations) and
collateralized cash. The Treasurer looks
for opportunities to use restricted cash in
a net borrowing at another location and
in doing so, get these funds set off from
the balance sheet. Hence, while waiting
for windows of opportunity to invest in
the same country or repatriate back to the
parent, the Treasurer will seek to optimize
returns over time and also manage the cur-
rency aspect since the money is likely to be
held in a local currency in that country.
A. True
B. False
4. B 5. A
1.1 TREASURY MANAGEMENT 3

C. Maybe 11. Which is not a money market product?

D. Sometimes A. Commercial Paper

PRACTICE BOOK» NOT FOR SALE

6. the time between when the check is de-
posited and when it is available to the re-
cipient is availability float
A. True
B. False
7. These gains and losses can be quite large,
and would initially appear to be a good
way to judge the hedging activity of the
treasury staff
A. cost of outside services
B. unhedged gains and losses
C. transaction error rate
D. bad debts as a percentage of sales
8. In the context of cash transfer controls,
the acronym “AML” stands for Anti-
Money Laundering.
A. TRUE
B. FALSE
9. It must be done in right quantity such as
the acquisition of fixed assets, purchase
of raw material, payment of expenses like
rent, salary, bills, interest and so forth.
A. Availability of Funds
B. Cash Management
B. Interbank money market
C. Negotiable Certificate of Deposit
D. Medium Term Notes
12. Convertibility of a currency is indicated by
its
A. conversion at market rates
B. Conversion at market rate but with re-
strictions imposed by the government
C. conversion at market rate without any
quantitative restriction by government.
D. none of above
13. Float typically does not reduces available
liquidity and interest earnings or savings
owing to the use of the company’s own
money. There could also be an opportunity
loss of the funds.
A. True
B. False
C. Maybe
D. Sometimes
14. Supporting financial control in the creation
of a shared service centre to optimize the
AR and AP processes
A. False

C. Deployment of Funds B. True

D. Risk Management C. Sometimes

D. Maybe
10. The company would be negatively im-
pacted by disruption to operations or the 15. The treasury manager must ensure that
financial supply chain due to a lack of fi- the funds are available with the organiza-
nancing or high market volatility. tions in sufficient quantity.
A. Sometimes A. Availability of Funds
B. True B. Cash Management
C. False C. Deployment of Funds
D. Maybe D. Liquidity Maintenance

6. A 7. B 8. A 9. C 10. B 11. D 12. C 13. B 14. B 15. A 16. C

1.1 TREASURY MANAGEMENT 4

16. What is the normal limit of the required B. Limiting treasury personnel’s access
Intermediary Macroprudential Ratio? to organizational funds.
A. 9% C. Protecting treasury personnel from
B. Above 100% making unauthorized transfers or transac-
tions.
C. Between 84%-94%
D. All of the above.
D. Below 100%
22. Shares which enjoy preference over pay-
17. The securities contracted basically on ac-

NARAYAN CHANGDER
ment of dividends are called
count of Long term investment relation- A. equity Shares
ships or for steady income and statutory
obligations are classified under (i) Held to B. preference shares
Maturity (ii) Held for Trading 23. The higher the DPO is, the longer the pe-
A. (i) riod allowed to make the payment and
hence the greater the use of cash. Some
B. (i) (ii)
companies take an improving DPO project
C. (ii) to be licensed to delay payments to suppli-
D. none of above ers. This is not a good practice. The AP for
a company is the accounts receivable (AR)
18. Policies are the basis of the operation of a for its supplier. If the payment needs to
treasury. be delayed, the terms have to be agreed
A. False on up front at the time of negotiation.
B. Maybe A. True
C. Sometimes B. False
D. True C. Maybe
D. Sometimes
19. Which among the statements is a consider-
ation of non-residents accounts? 24. It is the periodic net settlement of specific
outstanding payments between different
A. Resident status
entities or units. This is different from
B. Joint ownership gross settlement, whereby each payment
C. Centralized ownership is made individually.
D. Duration of presence in that country A. Nutting
B. Netting
20. The stock market is one of the most pop-
ular types of financial markets, the stock C. Natting
market trades shares of ownership of pub- D. Notting
lic companies
25. This is a company’s designated long-term
A. Stocks market partner, with whom the company does the
B. Derivatives Market bulk of its business.
A. Relationship Bank
21. What are the controls that should be imple-
mented for proper treasury management? B. Bank Account Analyst
A. Implementing segregation of duties C. General Account Service
within the treasury function. D. Depository Service

17. B 18. D 19. D 20. A 21. D 22. B 23. A 24. B 25. A

1.1 TREASURY MANAGEMENT 5

26. The financial market may have or not have more accurate.; Statement 2:Overreport-
the physical location and the exchange of ing is also a danger, and hence the trea-
the financial instruments and the financial sury policy must stipulate the formats, re-

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securities may be exchanged between the cipients, and frequency of regular report-
parties over the phone or the internet as ing.
well. A. Statements 1 and 2 are False
A. TRUE B. Statement 1 is false but Statement 2 is
B. FALSE true
C. Statement 1 is True but Statement 2 is
27. Reconciliation is important in cash trans- False
fer controls to identify discrepancies and
errors. D. Statements 1 and 2 are True

A. TRUE 31. It is possible to outsource many Treasury

tasks and functions, and many service
B. FALSE
providers provide reliable, flexible, and
highly regulated levels of service across
28. In addition to segregation controls and in-
various levels.
ternal auditing, the treasurer should im-
pose unlimited controls on a variety of A. Service Providers
transactions B. Service Technology
A. True C. Service Initiators
B. False D. Servince Developers

29. Statement 1:Poor management of liquidity 32. It sends funds to the recipient’s bank ac-
could result in a spike in interest expense count more rapidly than any other form of
to raise money in crisis situations, which payment, and is the standard form of in-
impacts the company’s profitability rather ternational payment.
severely.; Statement 2:Stability of assets
A. Remote deposit capture
and liabilities, especially across debt and
capital investments, is a good indicator of B. Remote Disbursement
a firm ‘s control over its financial manage- C. Wire Transfer
ment.
D. ACH Payments
A. Statement 1 is True but Statement 2 is
False 33. How much net open position in foreign cur-
rency is allowed by Bank Indonesia for
B. Statement 1 is False but Statement 2
banking?
is True
A. 5% of the capital
C. Statement 1 and 2 are False
B. 10% of the capital
D. Statement 1 and 2 are True
C. 15% of the capital
30. Statement 1:Reporting is also an indepen- D. 20% of capital
dent activity, and firms are moving to-
wards automating it to reduce manual in- 34. is made on a paper document, which has
tervention and thus become timelier and traditionally been physically routed from

26. A 27. A 28. B 29. D 30. D 31. A 32. C 33. D 34. A

1.1 TREASURY MANAGEMENT 6

the payer to the payee, to the payee’s C. any number

bank, and then back to the payer’s bank D. none of above
A. check payment
38. Coordinating the process of consolidating
B. check deposit and netting payments for increased effi-
C. bills ciency
D. bills payment A. True
B. False
35. Statement 1:Internal processes and their

NARAYAN CHANGDER
location is a strong determinant of risk and C. Maybe
its measure. Operational risk and control D. Sometimes
are core element of the treasurer’s respon-
sibility, and the robustness of internal pro- 39. It is the uncertainty associated with the
cesses becomes a critical part of the firm’s nonpayment of monies owed to a party by
success ; Statement 2:The ability not another party, for reasons of intent or fi-
to bargain with customers and suppliers nancial or regulatory inability
and to negotiate terms favorable to the A. Operational Risk
firm is an important source or mitigation B. Business Risk
of risk.
C. Credit Risk
A. Statements 1 and 2 are False
D. Market Risk
B. Statement 1 is false but Statement 2 is
True 40. The combination of the floats associated
C. Statement 1 is True but Statement 2 is with these inbound and out-bound check
False payments is the

D. Statements 1 and 2 are True A. availability float

36. Efficient forecasting of cash flows remains
one of the determinants of a company’s
well-oiled financial machinery since the ac-
curacy and timeliness of the forecasting
process do not determine visibility and
hence the ability to better manage the
company’s cash flows, borrowings, invest-
ments, and balance sheet.
A. True
B. False
C. Maybe
D. Sometimes
37. An eligible entity, will in normal circum-
stances, be allowed to open and maintain
only SGL account.
A. two
B. One
B. mail float
C. net float
D. processing float
41. Exchange position refers to
A. Net balance of aggregate purchases
and sales made by the bank in a particu-
lar currency
B. Aggregate purchases made by the
bank in a particular currency
C. Aggregate sales made by the bank in a
particular currency
D. none of above
42. In a letter of credit transaction, who is re-
sponsible for creating the letter of credit
and has control over its terms and condi-
tions?
A. Importer’s bank

35. B 36. B 37. B 38. A 39. C 40. C 41. A 42. A

1.1 TREASURY MANAGEMENT 7

B. Exporter’s bank 47. Investments in securities made to earn

C. Nominated bank profits from short term price movements
are classified under

PRACTICE BOOK» NOT FOR SALE

D. Confirming bank
43. Treasury Deals are normally done over
phone or over dealing screen. The Deal
terms are confirmed in writing by
A. Mid office
B. Front office
C. Back offie
D. none of above
44. If Bank Indonesia increases the Govern-
ment Bond Repo interest rate, it means
that BI is doing:
A. Buy back government bonds
B. Requires short term funds
C. Absorb liquidity in the market
D. Increase the number of outstanding
bonds
45. Which of the following is /are correct re-
garding the Open position in Forex?(i) po-
sition limits are prescribed currency wise
as also for aggregate position in rupees (ii)
there are separate limits for “day light”
A. Only (i)
B. Only (ii)
C. Both (i) & (ii)
D. none of above
46. What are the primary responsibilities of a
Treasury Manager?
A. Monitoring financial markets and eco-
nomic data.
B. Making sure the organization complies
with regulations and financial standards.
C. Fostering relationships with exter-
nal stakeholders such as banks and in-
vestors.
D. All of the above.
A. Available for Sale
B. Held to Maturity
C. Held for Trading
D. none of above
48. One of the primary objectives of the trea-
sury management is to manage financial
risk to allow the enterprise to meet its fi-
nancial obligations, as they fall due and
also ensure predictable performance of the
business.
A. Risk Management
B. Optimum utilization of resources
49. An optimum level of liquidity should be
maintained in the business, for the better
and smooth functioning of the business, i.e.
the company must be able to fulfil its fi-
nancial obligation when they become due
for payment, such as payment to suppliers,
employees, creditors, etc.
A. CASH MANAGEMENT
B. LIQUIDITY MANAGEMENT
50. Diversification involves moving the fi rm ‘s
portfolio of risks to a targeted and presum-
ably optimal mix of products across mar-
ket factors to achieve a targeted degree
of risk return. It is generally is used in
line with the concept of not putting all your
eggs in the same basket and the assump-
tion that a well-diversified portfolio of
risk will yield middle-of-line returns over a
period of time, making the fi rm generally
immune to large gains should the market
move in its favor or large losses in case of
adverse market action.
A. True
B. False
C. Maybe
D. Sometimes

43. C 44. C 45. C 46. D 47. C 48. A 49. B 50. A

1.1 TREASURY MANAGEMENT 8

51. Regulations and the ability to raise funds to reduce the impact of dilution and also to
with ease allow the company more and try to extract more capital from existing
better alternatives to decide the type of shareholders without having to involve a
capital to be raised. On the debt side, reg- new set of investors or banks for borrow-
ulatory limits on exposure to single compa- ing.
nies and groups, capital adequacy require- A. True
ments for banks, and definitions of non-
performing assets, apart from restrictions B. False
on investment and overseas investors in C. Maybe

locally issued debt, become determinants.
A. True
B. False
C. Maybe
D. Sometimes
52. It is the change in the financials of the firm
owing to the change in the volatility of a
given market factor. Wherein vega is the
used to denote the sensitivity of the value
of the firm or the portfolio to changes in
volatility.
A. Volatility Risk
B. Market Risk
C. Credit Risk
D. Liquidity Risk
53. Statement 1:Industry practices and com-
petitive action impact the nature of risk
that the company faces ; Statement
2:The ability not to bargain with cus-
tomers and suppliers and to negotiate
terms favorable to the firm is an important
source or mitigate of risk.
A. Statements 1 and 2 are False
B. Statement 1 is false but Statement 2 is
True
C. Statement 1 is True but Statement 2 is
False
D. Statements 1 and 2 are True
54. A rights issue is an issue of an addi-
tional set of shares to existing sharehold-
ers (based on their interest). This is used
NARAYAN CHANGDER
D. Sometimes
55. Process notes decreased transparency
gives rise to error and improvement op-
portunities, thereby increasing control and
water tightness of the process.
A. Sometimes
B. False
C. True
D. Maybe
56. The customer ‘s inability to pay due to fi-
nancial stress and liquidity issues at its
end directly impacts the credit and receiv-
ables for the firm, delaying the availability
of cash and putting added pressure on the
Treasurer to sustain the operations while
waiting for the funds to come in.
A. True
B. False
C. Maybe
D. Sometimes
57. From an accounting standpoint, the report-
ing and fi ling of returns that the compa-
nies and subsidiaries perform in each loca-
tion or jurisdiction where they are present
provides an interesting challenge and pits
the accounting financials against the value
that the business actually believes it has
generated.
A. True
B. False
C. Maybe
D. Sometimes

51. A 52. A 53. C 54. A 55. B 56. A 57. A 58. B

1.1 TREASURY MANAGEMENT 9

58. Exchange position is also known as 63. Statement 1:Risk means uncertainty, not
A. “Trading Position” necessarily losses.; Statement 2:Risk man-
agement is not necessarily about lowering

PRACTICE BOOK» NOT FOR SALE

B. “Dealing position” risk.
C. “Settlement position” A. Statement 1 and 2 are False
D. none of above B. Statement 1 is True but Statement 2 is
False
59. The time between when the check is de-
C. Statement 1 is False but Statement 2
posited and when it is available to the re-
is True
cipient is
D. Statement 1 and 2 are True
A. processing float
B. availability float 64. The combination of the floats associated
with these inbound and out-bound check
C. presentation float payments is the net float
D. mail float A. True
60. A is a place where two parties are in- B. False
volved in transaction of goods and services
65. It is made on a paper document, which has
in exchange of money.
traditionally been physically routed from
A. financial market the payer to the payee, to the payee’s
B. market bank, and then back to the payer’s bank
A. bank check
61. Trading in Foreign exchange refers to
B. check payment
A. Purchase/sale of FC in the market
C. bank draft
other than to cover merchant related
transactions D. all of the above
B. Purchase/sale of FC in the market only 66. Which among the statements is Step 2 of
to maintain square position at EOD a card settlement process?
C. Purchase/sale of FC in the market re- A. Confirmation of validation
lated to merchant transactions only trans-
B. Card swipe, basic verification, and re-
actions
quest for verification on acquiring the
D. none of above bank’s network

62. It refers to the fluidity of business activi-
ties can be improved by constructive reso-
lution of challenges and future trouble ar-
eas and stepping up to preempt liquidity
or internal customer situations.
A. Proactiveness
B. Teamwork
C. Transparency
D. Culture Knowledge
C. Data request sent for validation
D. Purchase and presentation of card
67. One of the earliest forms of exchange of
value, currency notes and coins are still
used for corporate transactions in many
parts of the world. One of the benefits of
using cash is that credit risk is eliminated,
as is possible float-the cash is available
in physical form and can be used immedi-
ately.

59. B 60. B 61. A 62. A 63. D 64. A 65. B 66. B 67. A

1.1 TREASURY MANAGEMENT
A. True
B. False
C. Maybe
D. Sometimes
68. Value Free Transfer (VFT) of securities
means
A. transfer of securities from one SGL ac-
count of an entity to another SGL or CSGL
account of another entity with correspond-
ing payment legin the books of RBI.
B. transfer of securities from one SGL ac-
count to another SGL or CSGL account
combined with corresponding payment
leg in the books of RBI.
C. transfer of securities from one SGL
account to another SGL or CSGL account
without corresponding payment legin the
books of RBI.
D. none of above
69. In the context of global ACH payments,
what is one limitation mentioned in the in-
formation?
A. Limited remittance information
B. Availability of ACH systems worldwide
C. High transaction fees
D. Dependability in areas without ACH
systems
70. The cost, control, backup, access, and ser-
vice providers, among other aspects, de-
termine the location of and infrastruc-
ture
A. centralized processes
B. centralized systems
C. centralized technology
D. centralized authority
71. A company can have its bank receive and
process checks on its behalf, which is
termed a
68. C 69. A 70. B 71. A
10
A. lockbox service
B. value date
C. treasury box
D. cannot be determined
72. The term Euro-currency market refers to
NARAYAN CHANGDER
A. The market where the borrowing and
lending of currencies take place outside
the country of issue
B. The countries which have adopted
Euro as their currency
C. The market in which Euro is exchanged
for other currencies
D. none of above
73. It ensures the business is accurately track-
ing its daily sales and payments in an effec-
tive manner, while also having sufficient
liquidity to meet both expected and unex-
pected financial obligations.
A. Liquidity Management
B. Cash Management
C. Working Capital Management
D. Treasury Management
74. What is not the aim of Liquidity Manage-
ment?
A. Hedging the risk of interest rate
changes
B. Prepare bank operational funds
C. Fulfill the bank’s obligations
D. Comply with Bank Indonesia regula-
tions
75. What sort of strategies can a Treasury
Manager employ to ensure that the orga-
nization has sufficient liquidity?
A. Optimizing cash reserves by investing
idle cash in short-term instruments such
as money market funds.
72. A 73. D 74. A 75. D
1.1 TREASURY MANAGEMENT
B. Maximizing the organization’s borrow-
ing potential and capitalizing on long-term
investments.
C. Raising capital by issuing bonds, com-
mercial paper and other financial instru-
ments.
D. All of the above.
76. It is the uncertainty regarding the financial
performance caused by creditworthiness,
market movements, availability of money,
accounting and tax situations, and balance
sheet changes. Related yet different ele-
ments exist to create financial risk for a
firm.
A. Operational Risk
B. Business Risk
C. Financial Risk
D. Credit Risk
77. Market instruments are available as over-
the-counter or exchange-traded contracts.
They require some form of credit risk lim-
its from and with the other counterparty,
collateralization, or up-front payment of
premia. Market instruments could be price
insurance, price-fixing, price variability, or
combinations thereof.
A. True
B. False
C. Maybe
D. Sometimes
78. The accounting staff generally handles the
receipt and disbursement of cash, but the
treasury staff needs to compile this in-
formation from all subsidiaries into short-
range and long-range cash forecasts.
A. Cash forecasting
B. Working capital management
C. Cash management
D. Investment management
76. C 77. A 78. A 79. A
11
79. “Mail float” refers to the delay caused by
transporting a check to the payee.
PRACTICE BOOK» NOT FOR SALE
A. TRUE
B. FALSE
80. The value-added Treasury centre (TC++)
concept takes off from the basic TC, fore-
casting, risk management decision making,
investment decisions, funding and liquidity
sourcing and intercompany funding, sys-
tems, control, and reporting all moving to
a
A. market-centralized location
B. commercialized location
C. decentralized location
D. centralized location
81. It is a management system that aims to
optimize a company’s liquidity, while also
mitigating its financial, operational, and
reputational risk.
A. TREASURY MANAGEMENT
B. FINANCIAL PLANNING
82. It is an excellent measure for keeping track
of the amount of debt that a company can
potentially borrow, based on that portion
of its accounts receivable, inventory, and
fixed assets that are not cur-rently being
used as collateral for an existing loan
A. Percentage
B. Treasury Base
C. Borrowing base usage percentage
D. Usage Percentage
83. This financial asset is usually a debt instru-
ment sold by companies or the government
to raise funds for short-term projects.
A. Certificate of Deposit (CD)
B. Bonds
80. D 81. A 82. C 83. B
1.1 TREASURY MANAGEMENT
84. What are the objectives of banking rela-
tions management?
A. Selecting financial institutions that can
fulfill the organization’s banking needs.
B. Negotiating optimal payment terms
with banks.
C. Developing mechanisms to manage
banking fees and maintain banking rela-
tionships.
D. All of the above.
85. It is the type of financing when the legal
holder of a bill (a commercial bill, such as
a banker ‘s acceptance draft or commercial
acceptance draft) transfers it to a funding
entity (such as a bank) to obtain cash (at
a value discounted for the interest for the
period) prior to its maturity date
A. Invoice Discounting
B. Bill Discounting
C. Sales Discounting
D. Immediate solutions
86. The primary advantage of using a lockbox
service for check payments is faster pro-
cessing times.
A. TRUE
B. FALSE
87. This can be a valuable tool for upgrad-
ing controls, procedures, and training, to
mitigate the risk of such errors occurring
again.
A. transaction error rate
B. accuracy of its cash forecast
C. borrowing base usage percentage
D. bad debts as a percentage of sales
88. Apart from meeting the Reserve Require-
ments, what else is an indication that the
bank is in liquid condition?
A. Have good interbank market access
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B. Have a lot of fixed assets
C. Always place excess funds into an-
other bank
D. Owns corporate securities
89. Which of the following is NOT objectives
of managing cash in a bank?
NARAYAN CHANGDER
A. To maintain the ability to pay obliga-
tions as they become due
B. To reduce borrowing requirements
and interest expenses
C. To keep foreign currency exposure and
transaction costs as low as possible
D. To ensure availability of funds at the
right time and at any cost
90. The deployment of funds has to be done
in right quantity such as the acquisition
of fixed assets, purchase of raw mate-
rial, payment of expenses like rent, salary,
bills, interest and so forth. For this pur-
pose, the treasury manager has to keep
an eye on all receipts of funds and the ap-
plication thereof.
A. Deployment of funds in adequate quan-
tity and at the right time
B. Availability of funds in adequate quan-
tity and at the right time
91. The purpose of value dating in the context
of check payments is to establish the pay-
ment recipient’s identity.
A. TRUE
B. FALSE
92. The location of the performing these
roles could be different from the accounts
and systems’ locations
A. people
B. process
C. product
D. project
1.1 TREASURY MANAGEMENT
93. In conservative situations, the return ob-
jective should be lower in priority than
principal protection and liquidity. Returns
have to be quantified in annualized terms
and measured with respect to the original
currency of investment or in terms of the
base currency of the company at a consol-
idated level. It is critical to evaluate the
payoff profile of an investment under all
scenarios.
A. True
B. False
C. Maybe
D. Sometimes
94. If the exporter’s bank is unwilling to make
this payment, then it is called the
A. nominated bank
B. Confirming bank
C. Advising bank
D. None of the above
95. Cash position refers to
A. Cash held by the Bank in their
branches in Foreign Currency
B. Debit balance in Bank’s Nostro ac-
count
C. Credit balance in Bank’s Nostro ac-
count
D. none of above
96. This area is appropriately referred to its
role to monitor both the front and the back
ends, with key control and reporting re-
sponsibilities.
A. Back Office
B. Front Office
C. Top Office
D. Middle Office
97. It allows a company to avoid the physical
movement of received checks to its bank
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A. Remote deposit capture
B. Remote Disbursement
PRACTICE BOOK» NOT FOR SALE
C. Wire Transfer
D. ACH PAYMENTS
98. The DNA of treasurer’s hats, except
A. economist and marketexpert
B. systems specialist
C. consultant and trusted advisor
D. CEO
99. It is the direct consequence of moves in
various market factors. It is usually more
easily quantifiable if one knows the extent
of one ‘s exposures.
A. Factor Risk
B. Liquidity Risk
C. Operational Risk
D. Volatility Risk
100. It is the purchase of a receivable or bill
from the seller of goods or services, where
the paying entity assumes responsibility
for the collection of receivables and in
some cases the credit risk as well.
A. Distribution of Receivables
B. Segmentation of Receivables
C. Factoring of Receivables
D. Classification of Receivables
101. What is the potential downside of initiat-
ing a wire transfer near the close of busi-
ness?
A. Delay in the value date imposed by the
receiving bank
B. Increased foreign exchange conver-
sion fees
C. Higher transaction fees from both is-
suing and receiving banks
D. Risk of insufficient funds to cover the
transfer
1.1 TREASURY MANAGEMENT
102. The evolution of public ownership has cre-
ated a separation between ownership and
management.
A. False
B. True
103. Which among the statements is not a
statement consideration for multiple cur-
rency accounts?
A. Segregation of customer’s funds
B. Method of foreign currency payments
C. Possibility of creating intercompany
loans
D. Timing of products and supplies pay-
ments
104. The primary advantage of remote deposit
capture for check payments is eliminating
the need for a physical bank branch.
A. TRUE
B. FALSE
105. One golden rule that has worked for
many companies is not to invest in any
product that they themselves cannot price
or break up. The more complicated the
product, the opaquer its pricing generally
is, and the greater the risk if the markets
move against the investor.
A. True
B. False
C. Maybe
D. Sometimes
106. What are the considerations for assess-
ing creditworthiness of a customer?
A. The customer’s financial strength and
credit scores.
B. The customer’s history for repayment
of loans and financial obligations.
C. The customer’s track record for meet-
ing payment terms and deadlines.
D. All of the above.
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107. “Swap Deal” transaction refers to
A. Bank buys and sells the specified FC si-
multaneously for same maturities
B. Bank buys and sells the specified FC si-
multaneously for different maturities
C. “Bank buys and sells the specified FC
for another currency
NARAYAN CHANGDER
D. none of above
108. When a Dealer says he has Open position
in a Currency, he means
A. Bank has made purchases of the con-
cerned currency
B. Bank has no balance in the currency
concerned
C. Bank has either overbought or over-
sold the currency concerned
D. none of above
109. A stock market is a platform for trading
of company’s shares at an agreed rate.
A. TRUE
B. FALSE
110. An in-house bank does not requires a
very high degree of expertise and high
process orientation. The scales of the
group’s operations and financial transac-
tions must also justify the in-house bank’s
investment and maintenance cost.
A. True
B. False
C. Maybe
D. Sometimes
111. Which among the statements is Step 11
of a simple funds transfer using SWIFT?
A. Paying bank sends cover payment in-
struction to Correspondent Bank
B. Paying bank sends direct payment in-
struction to Beneficiary Bank
C. Correspondent sends paying instruc-
tion to Beneficiary bank
1.1 TREASURY MANAGEMENT
D. Correspondent bank debits clearing
Nostro account, credit bene bank vostro
account
112. What is the purpose of the “lifting fee”
in wire transfer transactions?
A. To expedite the transfer process
B. To calculate the net float
C. To reimburse the payer for fees
D. To cover the receiving bank’s handling
of the transaction
113. do not have any maturity date.
A. Stocks
B. Bonds
114. It aimed at significantly reducing financial
risks which includes currency risk manage-
ment, commodity price risk management,
interest rate risk management and other
market risks management.
A. Financial risk management
B. Cash Management
115. Which among the statements is not a
statement consideration for multiple cur-
rency accounts?
A. Timing of products and supplies pay-
ments
B. Possibility of creating intercompany
loans
C. Method of foreign currency payments
D. Segregation of customer’s funds
116. To mitigate interest rate or rollover
risk, the investment must be treated as
the highest possible tenor:that is, getting
the money back when rates have moved
higher. From a liquidity perspective, con-
servative investors should take the tenor
of the investment as the maximum or ma-
turity period, since it must be assumed
that the investor will hold on to funds in a
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period of loosen liquidity, thereby locking
in the amount for the full tenor.
PRACTICE BOOK» NOT FOR SALE
A. True
B. False
C. Maybe
D. Sometimes
117. This is an arrangement where the im-
porter’s bank (the issuing bank) formally
autho-rizes an obligation to pay the ex-
porter’s bank during a specific period of
time, assuming that several documented
conditions have been met
A. Limited remittance information
B. Limited coverage
C. Confirmed letter of credit
D. Letter of credit
118. The treasurer should understand the im-
plications of different methods of transfer-
ring cash to or from a company, since there
are significant differences in the costs and
cash flow speed of each one
A. True
B. False
119. What is one advantage of using local
electronic payment systems like the Auto-
mated Clearing House (ACH)?
A. Lower transaction fees for wire trans-
fers
B. Faster international fund transfers
C. Elimination of value dating
D. High foreign exchange conversion
fees
120. It is also focused on investment manage-
ment by redeploying business cash flows
efficiently and optimizing the risk-return
profile of investible surplus.
A. Funding Management
B. Cash Management
1.1 TREASURY MANAGEMENT 16

121. It is the impact on the firm ‘s financials by 125. Cash payments are often preferred by
the inability to provide any entity within businesses due to their convenience and
the group money required, when it is re- low transaction costs.
quired, where it is required, and in the A. TRUE
form that it is required. Any delay will
cause a financial disruption and sometimes B. FALSE
a very steep increase in the cost of funding
126. What are the major components of a cash
if not planned well.
management system?

NARAYAN CHANGDER
A. Liquidity Risk
A. Account management, budgeting and
B. Financial Risk forecasting.
C. Factor Risk B. Cash flow planning, short-term invest-
ing and risk management.
D. Credit Risk
C. Payment systems, reporting and inter-
122. Systems procured from a third party nal controls.
but operations managed in-house, which D. All of the above.
among the solutions is?
A. Outsourced solutions 127. Among the following statements are true
about treasury design, except
B. In-house solutions
A. Lower turnaround times for decision
C. Hybrid solutions making and resolution
D. Immediate solutions B. Increase cost
C. Lower cost of capital and increased
123. What is the primary objective of cash
availability and diversity of capital
transfer procedures?
D. Growth and increase in business and
A. To maximize profits
geographies
B. To ensure transparency
128. Call Money refers to a placement of Fund
C. To minimize taxes
D. To reduce employee turnover A. Overnight
124. Strategic or business cash is the short- B. Same day
term cash that is being kept for a specific C. Two days
purpose, such as an acquisition or capital
D. none of above
payment. Here we assume that the cash
that is going to be required for an identi- 129. Treasury management is management
fied purpose or incident will be returned system that aims to abridge a company’s
to the shareholders from the strategic or liquidity while also mitigating its financial,
business cash. operational and reputational risk.
A. True A. True
B. False B. False
C. Maybe
130. Financial risk management, is aimed at
D. Sometimes significantly reducing financial risks which

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1.1 TREASURY MANAGEMENT 17

includes currency risk management, com- 135. The time between when the check is de-
modity price risk management, interest posited and when it is charged to the
rate risk management and other market payer’s account is the presentation float

PRACTICE BOOK» NOT FOR SALE

risks management. A. True
A. TRUE B. False
B. FALSE
136. Letters of credit benefit the importer by
131. The actual balance maintained in the Nos- providing a payment guarantee from the
tro account abroad is better reflected in exporter’s bank.
A. TRUE
A. cash position B. FALSE
B. exchange position
137. The time between when the check is de-
C. Difference between Cash and Ex- posited and when it is charged to the
change position payer’s account is the
D. none of above A. mail float
132. Treasury Management aims to ensure B. processing float
that adequate cash is available with the C. availability float
organisation, during the outflow of funds. D. presentation float
A. TRUE
138. are often issued by organizations to
B. FALSE the shareholders free of charge as a gift
133. . Smooth and reliable processes con- in proportion to their existing shares with
tribute to fast turnaround and service lev- the organization.
els, which increase operational and finan- A. Founder Shares
cial costs and improve employee engage- B. Bonus Shares
ment.
139. The different relationships and collabora-
A. False
tions that Treasury needs to build to add
B. True value to the organization. Thus, without
C. Maybe the necessary amount of coordination, the
treasury would not be able to add value.
D. Sometimes
A. teamforce
134. Treasury team members need strong in-
B. teamwork
terpersonal skills and given the different
interfaces that Treasury has with external C. teambuilding
and internal organizations, their interper- D. teamplayers
sonal capacity is crucial, especially in rela-
tionship management 140. sends funds to the recipient’s bank ac-
count more rapidly than any other form of
A. relationship building
payment, and is the standard form of in-
B. relationship bonding ternational payment.
C. relationship engagement A. Check deposit
D. relationship wortiness B. ATM

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1.1 TREASURY MANAGEMENT
C. Money Remittance
D. Wire transfers
141. Which among the statements is Step 12
of foreign currency payment?
A. Paying bank sends cover payment in-
struction to Correspondent Bank
B. Beneficiary bank debits correspondent
Nostro account, credits customer account
C. Seller reconcile Accounts Receivable
D. Correspondent bank debits paying
bank Vostro, credit Nostro account with
the central bank
142. General skills provide interpersonal and
fundamental technical skills that treasur-
ers have to look at from growth and train-
ing, except
A. Business
B. Technology
C. Process Orientation
D. Relationship Building
143. CFO stands for Chief Forecasting Officer
A. True
B. False
144. Factors that determine Cost of Fund:
A. Liquidity level, interest rate and fund
structure
B. LPS interest rate, competitor interest
rate and credit interest rate
C. Credit interest rates, fund structures
and interbank interest rates
D. Credit interest rate, LPS interest rate
and liquidity level
145. Which among the following instrument is
not traded on NDS OM operated by RBI?
A. T-Bill
B. G-sec
C. Commercial paper
D. none of above
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146. are financial assets whose value is
derived from other underlying assets.
A. Derivatives
B. Cash or cash equivalents
147. allows a company to avoid the physical
movement of received checks to its bank.
A. Bank check
NARAYAN CHANGDER
B. Check deposit
C. Remote Deposit Capture
D. Remote Disbursement
148. The credit rating process is an involved
one. It uses both publicly available data
and information provided by the company
and its management. The process takes
a long time, and the rating agency ap-
plies a number of qualitative inputs on top
of the indications from the quantitative
data. The process has been improving over
time, and standards, methodologies, rat-
ings, and efforts are converging.
A. True
B. False
C. Maybe
D. Sometimes
149. What are the main functions of Treasury
Management?
A. Foreign exchange trading
B. Interbank placements
C. Maintain bank operational risks
D. Maintain bank liquidity
150. The outsourced model of the Treasury
works in a rather simple way and its out-
source the process focused or non-decision-
making activities and keep the , re-
view, and ownership in the house
A. decision-making
B. decision-authority
C. decision-level
D. decision-timeliness
1.1 TREASURY MANAGEMENT
151. Weak forecasting also enables a robust
risk management process. The core as-
pect of management of a firm’s risk is to
manage its future or expected cash flows
and balance sheet positions, which is effec-
tively the forecasted financial value of the
firm.
A. True
B. False
C. Maybe
D. Sometimes
152. Treasury Management also aims at ensur-
ing the effective utilization of the firm’s re-
sources, to reduce the operating costs and
also prevent liquidity shortage in the com-
ing time.
A. Optimum utilization of resources
B. Risk Management
153. Following are responsibilities of treasury
department in a bank’s, EXCEPT:
A. To ensure that the bank meets the min-
imum SRR imposed by the central bank
B. To constantly seek profitable invest-
ments for the bank’s excess funds
C. To manage the fixed assets of the bank
D. To minimize exposure to interest rate
risks
154. This market is used for lending or borrow-
ing money for the long term.
A. Capital Market
B. Stocks Market
155. Securities classified under the category
“Held for Trading” are to be sold within
days
A. 60
B. 120
C. 90
D. none of above
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156. Treasury Management also aims at ensur-
ing the effective utilization of the firm’s re-
sources, to reduce the operating costs and
PRACTICE BOOK» NOT FOR SALE
also prevent liquidity shortage in the com-
ing time.
A. Optimum utilization of resources
B. Deployment of funds in adequate quan-
tity and at the right time
157. It is the uncertainty associated with the
actual activity of doing business for a go-
ing concern. These risks are largely deter-
mined by the business managers in a firm
and on-the-ground intelligence in global
companies
A. Market Risk
B. Business Risk
C. Operational Risk
D. Liquidity Risk
158. What are Bank Indonesia’s requirements
for Primary Statutory Reserves?
A. 12%
B. 9%
C. 6%
D. 4%
159. A market where individuals invest for a
longer duration i.e. more than a year is
called as capital market.
A. FINANCIAL MARKET
B. CAPITAL MARKET
160. Financial markets provide the channel
through which the new savings of the in-
vestors flow in the country which aid in
the capital formation of the country.
A. Capital Formation
B. Easy Access
161. Independent verification of documents
helps verify the accuracy of cash transfer
documentation.
1.1 TREASURY MANAGEMENT 20

A. TRUE 167. Which among the statements is Step 10

of a clearing process of cheques?
B. FALSE
A. Confirmation of funds available & re-
162. are those assets with fixed or deter- turn of bounced cheques
minable payments
B. Cheques presented to the clearing
A. Loans and Receivables
C. Debit to payer’s account
B. Bonds
D. Cheque deposit

NARAYAN CHANGDER
163. The investment policy of a Bank should 168. The financial can be defined as an
contain (i) Permissible investments (ii) investment asset whose value is derived
SLR and Non-SLR investments (iii) Private from a contractual claim of what they rep-
placement resent
A. (i) A. assets
B. (i) (ii) (iii) B. liabilities
C. (i) (ii)
169. What are debt securities issued
D. none of above by regional governments or regional
government-owned enterprises called?
164. eliminates the need to physically trans-
fer check payments to the local bank for A. Convertible Bonds
deposit. B. Corporate Bonds
A. ACH Payments C. Retail Bonds
B. Wire Transfer D. Municipal Bonds
C. Debit Payments
170. One of the main functions of treasury-
D. Remote deposit capture management is to determine the proper
levels of cash or cash equivalents to allow
165. If a company receives large volumes of businesses the ability to meet their finan-
cash, it is usually more secure to hire a pro- cial obligations.
fessional money transporter to move the
cash to the bank on behalf of the company A. TRUE

A. True B. FALSE

B. False 171. have different roles to play which in-

clude price determination, funds mobiliza-
166. The advent of great banking platforms tion, risk sharing, easy access, liquidity,
and outsourced solutions has also dramat- capital formation and reduction in transac-
ically decreased leveraging systems and tion costs and provision of the required in-
technology. formation, etc.
A. False A. FINANCIAL MARKETS
B. Sometimes B. FINANCIAL SYSTEM
C. True
172. Outsourcing cannot always be proven to
D. Maybe provide significant cost savings since the

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1.1 TREASURY MANAGEMENT 21

third party must also build an adequate A. TRUE

profit into its service fee.
B. FALSE

PRACTICE BOOK» NOT FOR SALE

A. True
B. False 177. *This type of financial asset is the re-
served with the organization.
173. Your Bank is maintaining a Nostro ac-
count with Deutsche Bank, Hamburg in A. bonds
Euro. An export bill for Euro 25, 000/- B. cash or cash equivalent
sent for collection on 21.01.23 is re-
alised and Nostro account is credited on 178. Managing cash well is crucial for busi-
10.02.2003. This date is known as nesses of all sizes.
A. Payment date A. TRUE
B. Value date B. FALSE
C. Realised date
D. none of above 179. These payments include direct deposit
payroll, Social Security payments, tax re-
174. What is the purpose of liquidity plan- funds, and the direct payment of business-
ning? to-business and consumer bills.
A. Assessing the organization’s current A. Lifting fee payment
liquidity position.
B. ACH Payments
B. Identifying sources of short-term
funds to meet near-term obligations. C. Wire transfer
C. Preparing for contingencies such as D. Debit payment
extended market downturns.
D. All of the above. 180. What are the key components of an ef-
fective financial risk management frame-
175. The value-added Treasury centre (TC++) work?
concept takes off from the basic TC, fore-
casting, risk management decision making, A. Identifying financial risks and estab-
investment decisions, funding and liquidity lishing risk appetite.
sourcing and intercompany funding, sys- B. Monitoring and measuring financial
tems, control, and reporting all moving to risks.
a decentralized location.
C. Implementing appropriate risk mitiga-
A. True tion controls.
B. False D. All of the above.
C. Maybe
D. Sometimes 181. It is the presumed date of receipt of the
cash by the bank
176. Treasury management is the manage-
ment of all financial affairs of the busi- A. value date
ness such as raising funds for the busi- B. lockbox
ness from various sources, currency man-
C. post-date
agement, cash flows and various strate-
gies and procedures of corporate finance. D. none of the above

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1.1 TREASURY MANAGEMENT
182. The purpose of segregation of duties in
cash transfer controls is to prevent fraud
and errors.
A. TRUE
B. FALSE
183. Which among the statements is Step 4 of
a real-time gross settlement (RTGS) oper-
ation?
A. Seller sends invoice
B. Paying bank sends payment instruc-
tions to clearing
C. Clearing system credits bene bank
vostro account and sends payment in-
struction to Beneficiary Bank
D. Clearing system debits paying bank
vostro
184. An in-house bank requires a very high de-
gree of expertise and orientation. The
scales of the group’s operations and finan-
cial transactions must also justify the in-
house bank’s investment and maintenance
cost.
A. rare process
B. significant process
C. high process
D. low process
185. The four aspects that need to be consider
in treasury management activities are:
A. Asset, liability, liquidity, and risk
B. Amount, currency, time and place
C. Interest rate, currency, risk, and
amount
D. Amount, currency, rate, and time
186. The basic Treasury centre (TC) model
adds value parallel to an SSC. Here, more
complicated activities are taken up, and
the TC comes under the Treasurer’s direct
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ambit. Cash concentration, trade opera-
tions, netting, decentralized bank relation-
ship management, financing decisions, and
FX decisions are made in the basic TC. Also,
account ownership may reside with the TC.
A. True
B. False
NARAYAN CHANGDER
C. Maybe
D. Sometimes
187. It is refers to assess the Treasury’s func-
tioning, similar to a fitness test for the
human body, to identify potential pain
points and prevent any significant poten-
tial breakdown
A. Treasury Design
B. Treasury Fitness
C. Treasury Culture
D. Treasury Hats
188. Which of the following statements best
describe liquidity management in a Banks?
A. to ensure that bank can be met its long-
term obligations when it’s become due
B. Have sufficient liquidity at all time to
meet its current and future requirements
C. Liquidity is essential in all banks
to compensate for unexpected balance
sheet fluctuations only
D. none of above
189. Which among the statemens is not true
on providing liquidity to the firm?
A. achieved by determining the correct
liquidity sources
B. providing the company with the ability
to transfer cash
C. increasing reliance on market and ex-
ternal sources
D. raising the visibility of the money of the
company
1.1 TREASURY MANAGEMENT
190. It is the capital source in many coun-
tries and suppliers of useful investment
products and networks (funds, investment
banks, other), wherein the Treasury’s rela-
tionship with this external stakeholder for
both origination and investment is directed
under Treasury responsibilities.
A. Financial Mediators
B. Financial Mergers
C. Financial Regulations
D. Financial Institutions
191. In general, the Corporate Treasury man-
ages the organization’s liquidity risks, fi-
nancial risks, banking relationships, work-
ing capital and supporting management
and business units.
A. True
B. False
192. What is the purpose of fund transfer pric-
ing?
A. Determining the cost of creating liquid-
ity.
B. Quantifying the cost of providing fi-
nancing services.
C. Measuring income generated from in-
vestments.
D. All of the above.
193. The industries require the investors for
raising the funds and the investors require
the industries for investing its money and
earning the returns from them.
A. Easy Access
B. Risk sharing
194. It is important to have a broad set of con-
trols that help to ensure that transactions
are appropriate
A. True
B. False
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195. Treasury Management includes and
so it ensures that there are an effective
collection and payment system in the or-
PRACTICE BOOK» NOT FOR SALE
ganization.
A. Cash Management
B. Liquidity Management
196. What is the purpose of cash flow analy-
sis?
A. Assessing liquidity position of an orga-
nization.
B. Analyzing borrowing and investment
requirements.
C. Forecasting near-term liquidity needs.
D. All of the above.
197. ACH payments are widely available glob-
ally, making them the most dependable
means of transferring funds worldwide.
A. TRUE
B. FALSE
198. Which among the statements is not true
about lowering the cost of funding and the
cost of capital?
A. searching for the right sources of cap-
ital
B. achieving an acceptable capital struc-
ture
C. targeting and achieving an appropri-
ate credit rating
D. searching for disruptive opportunities
by the use of less foreign capital
199. The financial market performs the func-
tion of price discovery of the different fi-
nancial instruments which are traded be-
tween the buyers and the sellers on the
financial market.
A. Price Determination
B. Funds Mobilization
1.1 TREASURY MANAGEMENT
200. You are posted as Dealer in Forex Trea-
sury. On a day your branches have re-
ported purchase transactions which ex-
ceed the sale transactions. You are said
to be in
A. Square position
B. Over sold position
C. Overbought position
D. none of above
201. It is an electronic network for the pro-
cessing of both credit and debit transac-
tions within the United States and Canada
A. Remote deposit capture
B. Remote disbursement
C. Wire Transfer
D. ACH Payments
202. An individual owning one or more than
one share of an organization is called a
board of directors.
A. TRUE
B. FALSE
203. Liquidity is one of the most critical ele-
ments of the treasury manager’s domain,
and ensuring liquidity through as many in-
ternal means as possible is one of the
biggest challenges, and wins, for the Trea-
surer and chief financial officer.
A. True
B. False
C. Maybe
D. Sometimes
204. It is refers to the uncertainty caused by
the changes in market factors and environ-
ment. These could be simply moving of
various market factors or the availability
of capital such to include factor risk and
volatility risk.
A. Credit Risk
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24
B. Market Risk
C. Factor Risk
D. Liquidity Risk
205. It deals with the generates appreciation
within Treasury for the integrity of well-
laid-out processes, which ensures that
other roles and external service providers
NARAYAN CHANGDER
are also active in making the end-to-end
financial supply chain run smoothly and ef-
ficiently.
A. Accounting
B. Regulation
C. Technology
D. Process Orientation
206. To have a close monitoring of the trans-
actions happening in the Bank’s Nostro ac-
count, the Bank in India has to maintain a
ledger account knows as
A. Mirror Account in concerned FC as well
as INR
B. No need to maintain any account as
branch can have ready access to the Nos-
tro balance
C. Mirror Account in concerned FC only
D. none of above
207. Outsourcing and business process effi-
ciency is where the bank and special-
ized institutions have made processing a
core competency-handling huge volumes
with amazing accuracy and cost efficiency
driven by economies of scale. Many pro-
cesses that were tedious to execute, ex-
pensive to staff, and provided multiple op-
portunities for error, owing to specializa-
tion or scale required, have now become
candidates for outsourcing or automation,
or both.
A. True
B. False
C. Maybe
D. Sometimes
1.1 TREASURY MANAGEMENT
208. It is responsible for a company’s liquidity
A. Cash department
B. Finance department
C. Administrative department
D. Treasury department
209. Systems developed in-house with own
operations, which among the solutions is?
A. In-house solutions
B. Hybrid solutions
C. Outsourced solutions
D. Immediate solutions
210. Which among the statements is a not jus-
tification to manage financial risk?
A. Enhance Competitive Advantage
B. Prevent a Liquidity Problem
C. Lower the Cost of Capital
D. Location of the Company and Sub-
sidiaries
211. The enterprise appraisal process involves
a detailed study of the qualitative as-
pects only of a company’s financials and
business model. This does not includes
physical inspection of premises, plant, and
equipment; detailed discussions with man-
agement and operations personnel; inde-
pendent research and verification from the
industry to corroborate management ‘s
views on the company’s products or ser-
vices; and other activities and informa-
tion gathering to allow risk managers and
bank branch management to decide on the
client’s creditworthiness.
A. True
B. False
C. Maybe
D. Sometimes
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212. The fees charged by banks for cash trans-
fers are the same for all types of cash
transfer methods.
PRACTICE BOOK» NOT FOR SALE
A. TRUE
B. FALSE
213. The following statements are the rea-
sons why firms generally stay put without
hedging, except
A. The principals and management have
not really explored managing risk as a key
initiative.
B. Market practice, stay put without
hedging
C. A hedge that went wrong generates a
knee-jerk reaction in many companies
D. The location of invoicing determines
tax and exchange matters
214. Open position in Forex trading refers to
A. All open market operations conducted
by various FIs
B. Open positions where where securi-
ties are bought in the Open market
C. Trading positions where Buy/sell are
not matched yet
D. none of above
215. It is also called as ordinary shares are the
shares where the payment of dividend is
directly proportional to the profits earned
by the organization.
A. Equity Shares
B. 1. Preference Shares
216. To avoid the risk, the bank posts the
amount of the deposit with a value date
that is one or more days later than the
book date
A. True
B. False
1.1 TREASURY MANAGEMENT
217. The lower the CCC, the more efficient are
the firm ‘s financial operations, since the
number of days of operations to be funded,
and hence the working capital requirement,
is lower.
A. True
B. False
C. Maybe
D. Sometimes
218. Which document is typically used to initi-
ate a bank transfer of funds?
A. Purchase order
B. Invoice
C. Cash receipt
D. Balance sheet
219. What is not a Primary GWM component?
A. What
B. Government Bonds available for sale
C. Nostro account at another bank
D. Account at Bank Indonesia
220. It is generally a score that indicates an
independent agency ‘s opinion on the de-
gree of credit risk of an issuer of debt, in-
dicating the agency ‘s assessment of the
intention and ability of the issuer to fulfil
its debt obligations over a period of time.
Ratings are typically established for short
term (generally around a year or lower
tenor) or long term,
A. Credit Evaluation
B. Credit Score
C. Credit Rating
D. Credit Assessment
221. If the treasurer can reliably predict how
long it will take for the checks to clear, it
is then possible to invest some of the cash
that is available due to uncleared checks
A. True
B. False
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222. As per RBI guidelines NOOPL should not
exceed of the total capital (Tier I and
Tier II capital) of the bank.
A. 25 %
B. 50%
C. 30%
D. none of above
NARAYAN CHANGDER
223. Which among the statements is not a con-
sideration of non-residents accounts?
A. Status with domestic tax authorities
B. Location of incorporation
C. Registration with local industry bodies
D. Netting capability and regulations
224. What is a foreign exchange transaction
with a delivery time of two weeks after
the transaction date called?
A. Spot
B. Forward
C. Swap
D. Future
225. In the context of remote disbursing, the
“presentation float” is the period between
depositing a check and fund availability.
A. TRUE
B. FALSE
226. A company can have its bank receive
and process checks on its behalf, which is
termed a lockbox service
A. True
B. False
227. It safeguards the existing assets, which
calls for the prudent investment of funds
while guarding against excessive losses on
interest rates and foreign exchange posi-
tions.
A. Sales and Marketing Department
B. Human Resource Department
1.1 TREASURY MANAGEMENT
C. Treasury Management
D. Maintenance Department
228. The can be defined as an investment
asset whose value is derived from a con-
tractual claim of what they represent.
A. financial assets
B. liquid assets
229. What is Treasury Management?
A. The process of determining organiza-
tional goals and objectives to optimize in-
vestment of idle cash or money.
B. Making sure the organization complies
with regulations and financial standards.
C. Establishing cash flow policies and
performing cash flow analysis to meet the
organization’s goals.
D. All of the above.
230. The more decentralized the operations,
the more important the need for a well-
planned, tested, and relax contingency
plan.
A. True
B. Maybe
C. False
D. Sometimes
231. This metric is relevant only if the treasury
department is responsible for the granting
of customer credit.
A. bad debts as a percentage of sales
B. borrowing base usage percentage
C. accuracy of its cash forecast
D. Percentage of sales
232. What is the primary advantage of using
online payment gateways in cash transfer
procedures?
A. Slower transaction processing
B. Higher transaction fees
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C. Enhanced security and convenience
D. Limited payment options
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233. What is the primary advantage of using
ACH payments?
A. Fast international transactions
B. Low transaction costs
C. Secure handling of cash
D. Direct payment from credit cards
234. Statement 1:Historical volatility. Mea-
sured by historical trends and data.; State-
ment 2:Exponential weighted moving av-
erage. Quoted and traded by traders in
professional markets; it is commonly used
in pricing options
A. Statements 1 and 2 are False
B. Statement 1 is false but Statement 2 is
True
C. Statement 1 is True but Statement 2 is
False
D. Statements 1 and 2 are True
235. Which is a strategy to fulfill short-term
liquidity in banking?
A. Selling securities or bonds
B. Selling some bank shares to the public
C. Increase deposit interest
D. Doing capital increase
236. It is refer to the activity of identifying
risk and reaching a state of risk that is re-
quired to achieve desired objectives.
A. Risk Management
B. Risk Identification
C. Risk Evaluation
D. Risk Mitigation
237. In a quote exchange rate, the currency
that is to purchase with another currency
is called
A. Quote currency
1.1 TREASURY MANAGEMENT
B. Base currency
C. Local currency
D. none of above
238. If Treasury is a cost centre or a benefits
centre, whether it needs to be an active or
passive Treasury, all aspects must be es-
tablished in advance, and treasury strat-
egy must specify the goals accordingly.
A. Sometimes
B. True
C. False
D. Maybe
239. What is the primary purpose of providing
wire transfer instructions to a bank?
A. To request a foreign exchange conver-
sion
B. To expedite the wire transfer process
C. To determine the payment recipient’s
identity
D. To avoid transaction fees imposed by
banks
240. While computing the Exchange position,
the dealer will take into account
A. All purchases/sales made on Forward
basis
B. All purchases/sales made on Spot ba-
sis only
C. All purchases/sales made on Spot or
Forward basis
D. none of above
241. Implementing dual authorization for
transfers is an example of preventive con-
trol in cash transfer procedures.
A. TRUE
B. FALSE
242. Given the Treasurer’s duty to handle
volatility, which includes balance sheet
variability, the Treasurer’s relations with
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the accounting systems and the financial
controller are insignificant in the Trea-
sury’s smooth functioning and efficiency
parameters.
A. Maybe
B. False
C. True
NARAYAN CHANGDER
D. Sometimes
243. is also an important type of financial
market that enables the trading of curren-
cies.
A. Foreign Exchange Market (Forex Trad-
ing)
B. Derivatives Market
244. If the amount of liquidity in the market is
very tight, Bank Indonesia will:
A. Absorb liquidity in the market
B. Inject liquidity in the market
C. Raise the FASBI interest rate
D. Increase Bank Indonesia’s repo inter-
est
245. The principles of management include of
the following, except
A. Planning
B. Planting
C. Decision-making
D. Controlling
246. Statement 1:Risk management is the um-
brella process. ; Statement 2:Risk reduc-
tion is only one of the ways to manage
risk.
A. Statements 1 and 2 are False
B. Statement 1 is false but Statement 2 is
true
C. Statement 1 is True but Statement 2 is
False
D. Statement 1 and 2 are True
1.1 TREASURY MANAGEMENT
247. What is the purpose of a cash flow state-
ment in cash transfer procedures?
A. To track sales revenue
B. To manage employee salaries
C. To monitor cash inflows and outflows
D. To calculate income tax
248. Main function of the Back office in a Trea-
sury department includes
A. Confirmation, settlement and Reconcil-
iation
B. Providing UPS to Dealing room
249. is a payment on behalf of the payer
A. check payment
B. company payment
C. bank check
D. none of the above
250. It ensures that a company has sufficient
cash available at all times to meet the
needs of its primary business operations
A. Cash Department
B. Treasury Department
C. Marketing Department
D. HR Department
251. Which among the statements is not a gen-
eral consideration of account structures?
A. Complexity of operations
B. Decentralized management culture
C. Tax advantages
D. Inflows are used to fund outflows
252. How can a company avoid high foreign
exchange conversion fees in wire trans-
fers?
A. Requesting immediate value dating
B. Paying in the recipient’s currency
C. Using the same bank at both ends of
the transaction
D. Avoiding wire transfers altogether
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253. The SSC technically covers areas that re-
port to the financial controller. While it re-
mains very close linkages to the Treasury’s
PRACTICE BOOK» NOT FOR SALE
functioning, it can be distinct from an orga-
nizational standpoint. Given the closeness
and proximity, transactionally and concep-
tually, to Treasury activities and processes
and the interconnectedness of the two, we
have included these areas in this discus-
sion’s scope.
A. True
B. False
C. Maybe
D. Sometimes
254. It refers to enable an atmosphere of
knowledge and positive teamwork to en-
sure the highest work and motivational
standards
A. Treasury Fitness
B. Treasury Hats
C. Treasury Design
D. Treasury Culture
255. Stages in Treasury Centralization (ar-
range according to stages) I. Complete
decentralizationII. Centralized netting and
hedgingIII. Centralized working capital
managementIV. Centralized investments
A. I, II, III, IV
B. I, II, IV, III
C. I, III, IV, II
D. IV, II, III, I
256. What payment method is commonly used
for small payments, such as office supplies
and vendor payments, to streamline the
purchasing process?
A. Wire transfer
B. ACH debit
C. Procurement card
D. Letter of credit
1.1 TREASURY MANAGEMENT
257. The team’s commitment and success de-
pend a great deal on how well the team
members work together to deliver a solid
and successful performance. Working in
a cross-cultural, global setting often in-
cludes understanding the different team
members’ experiences, markets, and envi-
ronments.
A. culture mindset
B. culture knowledge
C. culture wisdom
D. culture awareness
258. Have available various alternatives to in-
vest any excess funds at the highest pos-
sible returns refers to:
A. Investment management
B. Risk management
C. Liability management
D. Asset management
259. You are approached by a customer to is-
sue DD for USD 7000/-favourig Harvard
University. You have arrangement with
Wells Fargo Bank, New York. When the
DD is presented by the payee, it will af-
fect of the Bank.
A. “Exchange position”
B. “Cash position”
C. Not impact either of these.
D. none of above
260. In case of securities held by the Bank
“Marked to Market” means
A. current market value or purchase
price, whichever is lower
B. Market price
C. Purchase price
D. none of above
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261. Process notes provide a ready reference
tool for new workers to start execut-
ing their duties immediately and for ex-
isting workers to back up or recognize
process-related aspects in situations of un-
certainty.
A. True
B. Maybe
NARAYAN CHANGDER
C. Sometimes
D. False
262. Shares held by the management or
founders of the organization are called as
A. bonus shares
B. founder shares
263. The bank check is a payment on behalf of
the payer
A. True
B. False
264. It refers to the daily analysis and moni-
toring of processes ensure that little sur-
prises and organizational or other losses
occur due to insufficient or inadequate pro-
cedures followed.
A. Policy
B. Integration
C. Control
D. Reporting
265. The treasurer is responsible for maintain-
ing relations with a company’s banks.
A. True
B. False
266. Along with the determination of the
prices at which the financial instruments
trade in the financial market, the required
return out of the funds invested by the in-
vestor is also determined by participants
in the financial market.
1.1 TREASURY MANAGEMENT
A. Funds Mobilization
B. Price Determination
267. Procurement cards are primarily used for
large, one-time transactions in business-
to-business settings.
A. TRUE
B. FALSE
268. Entities who are eligible to open and
maintain a CSGL account with the Reserve
Bank on behalf of theirconstituents are
known as
A. ‘Gilt Account Holders (GAHs)
B. Good Account Holders
C. Great Account holders
D. none of above
269. What risk is associated with ACH debit
transactions and can occur when scammers
make unauthorized withdrawals?
A. ACH Credit Risk
B. ACH Operational Risk
C. ACH Debit Risk
D. ACH Systemic Risk
270. One of the underlying risks assumed is
that the investee or deposit taker is sol-
vent and can pay back the deposit or in-
vestment at maturity. However, if the de-
posit or investment is linked to the credit
of another party (credit-linked note), and
there is a possibility on paper that the in-
vestor will not get back 50% of the in-
vested amount, the note is not principal
protected.
A. True
B. False
C. Maybe
D. Sometimes
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271. By using a lockbox, a company can elim-
inate some of the float involved in check
processing and eliminate some check pro-
PRACTICE BOOK» NOT FOR SALE
cessing labor.
A. True
B. False
272. A third party vendor (could also be a
bank) runs the entire systems and opera-
tional process required for netting, which
among the solutions is?
A. Outsourced solutions
B. Hybrid solutions
C. Immediate solutions
D. In-house solutions
273. Statement 1:By reducing the likelihood
and potential costs of distress, a good risk
management process can move the firm to-
wards becoming neutral to performances
of its key market and credit environments
and hence towards a better rating.; State-
ment 2:A better rating would imply de-
creased ability to leverage and cheaper
sources of funding, leading to an overall
lowering of the cost of capital.
A. Statement 1 and 2 are False
B. Statement 1 is False but Statement 2
is True
C. Statement 1 is True but Statement 2 is
False
D. Statement 1 and 2 are True
274. The transactional and operational ele-
ment of cash management and money
movement, except
A. Settlement and execution of cash f ow
and cross-border transactions
B. Execution of trade-related transac-
tions, such as letters of credit and bank
guarantees
C. Establishing an appropriate forecast-
ing process for cash flows to enable poor
planning
1.1 TREASURY MANAGEMENT 32

D. none of above 280. Stress Testing carried out by banks to

measure their liquidity conditions within a
275. Many firms have implemented a cor- period of 30 days, namely:
porate hierarchy.
A. Liquidity Coverage Ratio
A. One-tier
B. Net Stable Funding Ratio
B. Three-tier
C. Two-tier C. Ratio Intermediary Macroprudential

NARAYAN CHANGDER
D. None of the above D. High Quality Liquid Assets

276. It refers on creating the right processes, 281. Which among the statements is Step 6 of
structures, and approaches at the right a ordinary value payments?
place with the right infrastructure and of
course the right people A. Paying bank batches all transactions
into a single file and sends to the clearing
A. Treasury Design system
B. Treasury Culture
B. Clearing system credits bene bank
C. Treasury Hats Vostro account, sends a file of all payment
D. Treasuty Fitness instructions to Beneficiary Bank
C. Bank debits clearing Nostro account
277. What is the purpose of capital manage-
credits customer account
ment?
A. Developing strategies to meet capital D. Paying Bank Debits customer for total
requirements. amount, credits clearing Nostro account

B. Monitoring and tracking the organiza-
tion’s capital expenses.
C. Managing debt levels and evaluating
capital investments.
D. All of the above.
278. It manage the financial risk to allow
the enterprise to meet its financial obliga-
tions, as they fall due and also ensure pre-
dictable performance of the business.
A. Optimum utilization of resources
B. Risk Management
279. Which among the statements is not a
money transfer mechanism?
A. Cheques and drafts
B. Bills and negotiable instruments
282. This financial asset is an agreement be-
tween an investor (here, company) and
a bank institution in which the customer
(Company) keep a set amount of money
deposited in the bank for the agreed term
in exchange for a guaranteed rate of inter-
est.
A. Certificate of Deposit (CD)
B. Bonds
283. Treasury Culture involves finance and job-
specific items that are core to the function-
ing of a well-rounded Treasury team, ex-
cept
A. Business
B. Regulatory

C. Gold bar deposits C. Written Communication

D. Electronic funds transfer D. Accounting

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1.1 TREASURY MANAGEMENT
284. The four major currencies in the world are
free to float against each other except one
of the following. Identify.
A. EURO
B. USD
C. Spanish Peso
D. none of above
285. You have entered into a Forward Pur-
chase contract with your exporter for USD
50, 000/-for two months. Delivery is in
April’23. This will enter into the exchange
position of Delaers’ book on
A. The date our Nostro account is cred-
ited with the proceeds of the export bill
B. The date of entering into the Forward
contract
C. The date of tendering of export docu-
ments for purchase/negotiation/discount
D. none of above
286. Acronym CSGL stands for
A. Conditional Subsidiary General ledger
B. Constituent Subsidiary General Ledger
C. Constituent separate general ledger
D. none of above
287. Treasury management drives value cre-
ation through maximizing cash liquidity for
companies that often have fluctuating cash
flow and needs.
A. TRUE
B. FALSE
288. Among the statemets are the qualities of
treasury culture, except
A. Transparency
B. Teamwork
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C. Proactiveness
D. Communicative
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289. It ensures that there are an effective col-
lection and payment system in the organi-
zation.
A. CASH MANAGEMENT
B. TREASURY MANAGEMENT
290. When a company has written a large vol-
ume of checks that have not yet cleared,
the available cash balance shown by the
company’s bank will be larger than the
company’s ledger balance
A. True
B. False
291. Which of the following is NOT a common
method of cash transfer?
A. Electronic funds transfer (EFT)
B. Cash in hand
C. Postal money order
D. Bartering goods
292. It is calculated using a monthly earnings
credit rate, multiplied by the average col-
lected balance in the account for the month
A. earnings allowance
B. Allowance
C. credit allowance
D. earnings credit allowance
293. Treasury management is a management
system that aims to optimize a company’s
liquidity while also mitigating its financial,
operational and reputational risk.
A. True
B. False