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Certified Treasury Professional Questions 276–280 (page: 57)

Updated On: 9-Feb-2026

Which of the following is generally NOT a benefit of financial risk management?

  1. The likelihood of financial distress decreases
  2. Greater predictability of future cash flows
  3. The opportunity to take advantage of market inefficiencies
  4. Enhanced borrowing advantage in credit markets

Answer(s): C



Which of the following options would be BEST suited for a firm that wishes to pay no premium?

  1. Cap
  2. Collar
  3. Floor
  4. Swaption

Answer(s): B



A small for-profit, start-up company is designing a retirement plan with the goal of minimizing costs and operating income volatility while providing a qualified retirement savings vehicle. Which of the following would be the BEST choice?

  1. Defined benefit plan
  2. Internal Revenue Code 401(k) plan
  3. Hybrid plan
  4. Internal Revenue Code 403 (b) plan

Answer(s): B



A company is filing for bankruptcy protection and is concerned about the welfare of its sizeable retiree population. Under ERISA, it is obligated to perform which of the following actions regarding its defined benefit plan?

  1. Use proceeds from asset sales to fund the plan liability.
  2. Convert the plan to a portable, hybrid vehicle.
  3. Record a distress termination with the PBG
  4. File a 5500 report (bankruptcy amendment) with the DOL.

Answer(s): C



A company which experiences increased business volumes but a minimal increase in profitability MOST LIKELY has:

  1. very high level of operating leverage.
  2. low fixed costs and high variable costs.
  3. high fixed costs and low variable cost.
  4. high effective cost of debt.

Answer(s): B



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