Free CTP Exam Braindumps (page: 37)

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A company expects the U.S. dollar to depreciate in value compared to the British pound. The company will have a British pound payment to make in five months. The company would MOST LIKELY buy:

  1. a U.S. dollar call.
  2. a U.S. dollar put.
  3. a British pound call.
  4. a British pound put.

Answer(s): C



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):

  1. decrease in earned surplus.
  2. decrease in stockholders’ equity.
  3. increase in capital surplus.
  4. increase in retained earnings.

Answer(s): D



The rate of interest commercial banks charge their best credit rated customers is called the:

  1. discount rate.
  2. call rate.
  3. prime rate.
  4. real interest rate.

Answer(s): C



If the Federal Reserve Board increased the discount rate, you would expect:

  1. long-term bonds to increase more in price than short-term bonds.
  2. short-term bonds to decrease more in price than long-term bonds.
  3. long-term bonds to decrease more in price than short-term bonds.
  4. that there would be no effect on either long- or short-term bond prices.

Answer(s): C






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