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FIN3703-25-EX10

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QUESTION

20

Which

of the following factors must be considered by the treasury before committing

the surplus funds to the commercial paper?

a.    

The

risk associated with calling the instrument back and the safety of the principal

invested should be prioritised

b.    

The

maturity of the security must be considered

c.    

The

degree of securities ratings must be considered

d.    

The

easily realised invested cash when it is required must be considered must be

prioritised

 

1.    a only

2.   

a, b, and d

only

3.    a, b, c, and d

4.   

a, c, and d

only

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QUESTION

19

Match the steps in the risk management process in

column A with the descriptions in column B below:

 

COLUMN A

 

COLUMN B

1

Step 1

 

a

Design

and develop a risk response strategy to address the risk in the business.

2

Step 2

 

b

The

amount of loss that is likely to occur needs to be determined or quantified.

3

Step 3

 

c

Determine

the degree of exposure before and after the mitigation.

4

Step 4

 

d

Detection

of variability of actual results from desired or expected results that can

result in a loss.

5

Step 5

 

e

Monitoring,

reviewing, and reporting stages in risk management.

 

 

 

 

The correct option to match the steps and descriptions

is …

a. 1. E;  2. D;

3. A; 4. B; 5. C

b. 1. D;  2. C;

3. B; 4. E; 5. A

c. 1. A;  2 .E;

3. B; 4. C; 5. D

d. 1. D; 2 .C; 3. B; 4. A; 5. E

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QUESTION 18

In

investing the surplus cash, the treasurer at Madiba Ltd bought commercial paper

at R300,000 with a face value of R310,000, a maturity of 100 days, and

brokerage fees and other charges of 4%.

The yield

of the commercial paper is … if the company holds the commercial paper until

maturity.

a.    18.05%

b.    22.11%

c.     26.12%

d.    28.42%

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QUESTION

17                                                                                                    

The market for previously issued securities and the

market for financial instruments with a relatively short-term maturity of less

than one year are known as the … market and … market, respectively.

a.    primary; secondary

b.    secondary; capital

c.     secondary; money

d.    primary; money

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QUESTION

16

The

managing directors of Non-Barbalas Beer Ltd, a manufacturer and distributor of

alcoholic beverages located in Rosslyn, stated that the company’s

individual locations manage their own bank accounts,

foreign exchange transactions, customer credit, payables, borrowing and

investment.

In addition, central staff net payments

between subsidiaries and hedge major foreign exchange and interest rate risks.

Based

on Non-Barbalas Beer Ltd information above, the business portrays or

exemplifies a good example of …

  1. complete

    decentralisation.

  2. incomplete

    decentration.

  3. complete

    centralisation.

  4. incomplete

    centralisation.

1.   

a and b

2.   

b and c

3.   

c and d

4.   

b and

d

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QUESTION

15

Segregation

of duties refers to a process in which the treasurer

establishes

treasury policies, monitors their implementation and compliance, and constantly

measures actual performance.

A.       True  

B.       False 

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QUESTION 14                                                                                                    

Match

column A with column B below:

Column

A

Column

B

1.

Certificate of deposits

a.

Unsecured security

2.

Commercial paper

b.

Government security

3.

Repurchase agreement

c.

Loan guarantee

4.

Banker’s acceptance

d.

Short-term financing

5.

Treasury bills

e.

Short-borrowing

 

f.

Securities issued to banks

 

The correct option/match is …

a,

1;c, 2;d, 3;e, 4;a,5;b

b,

1;d, 2;a, 3;e, 4;c, 5;b

c,

1;a, 2;f, 3;e, 4;c,5;b

d,

1;c, 2;a, 3;d, 4;f,5;b

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QUESTION 13

The cost to the company of the roll-over

will come to … which is equal to a discount rate of 11.5%.

  1. R28 356.17

  2. R28 541.10

  3. R28 721.90

  4. R28 127.87

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QUESTION

12

To

lock in a discount rate of 11.5%, the company will have to receive an amount of

… from the other party, determined.

  1. R4

    931.50

  2. R5

    390.10

  3. R5

    657.31

  4. R5

    844.68

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FOR QUESTIONS 11 TO 13, REFER TO THE FOLLOWING

INFORMATION:

 

It is expected that the short-term interest will rise, and you

wish to hedge the next roll over of the bankers’ acceptance bill with a forward

rate agreement (FRA).

Assume the following applies:

Roll-over                

         

            :15 August

 Settlement date                 

         :18 May

Spot rate on 15

August         

             :13.5%

FRA spot

(Bid/offer)          

                 :10.5%/11.5%

Nominal value                              :R1

000 000

Days                                            :90

days

 

QUESTION 11

The cost of the transaction is equal to ….

  1. R29

    171.34

  2. R30

    761.14

  3. R33

    287.67

  4. R35 258.32

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